10/7/2018 Markets drop this week, and I’m expecting more downside next week. Chinese stocks continue to drop.

In the last two weeks, I suggested that we would see QQQ retest the previous all-time high, and then drop from there.  It seems like I was right for once.

Anyways, although I favor a small move upwards in the next few days, I ultimately see the indexes moving lower in the next 2 weeks.  I suspect QQQ will touch 175 by Friday the 19th (highlighted in the rectangle below).

QQQ daily 10_7_2018.PNG

 

FB Weekly 10_7_2018.PNG

Above is the weekly chart of Facebook (FB).  I purchased some shares for my Roth IRA back in late July after it dropped 20% in one day.  I bought around 175 and plan to buy more near 150.  The support levels highlighted by the rectangles above are where I plan to buy more shares.  

From a technical perspective, the chart looks ugly.  Facebook has broken down from a 3-year uptrend line (highlighted by the diagonal line above) and has negative RSI divergence on the weekly chart.  Price made a new high, but the RSI indicator did not.  I plan to hold this stock for 2-5 years, with a selling price target between 215-300 depending on my mood.  

We will look at BABA and MU next week, but they are dropping and will likely continue to drop.

A stock that I am considering buying for the long-term hold (2+ years) is WB.  

WB Weekly 10_7_2018.PNG

Here’s the weekly chart of WB.  I did some short-term trades on this 6 months ago which didn’t go too well.  Anyways, WB peaked in early 2018 at about 140, and is now less than half that price.  There is no doubt that this stock is cheap when compared to where it was before.  However, cheap stocks generally get cheaper, so you may want to buy some shares in the next support level (40-50), and then at the 2014 IPO price of 20.  My price target is at least the previous all-time high at 140.  If you buy at an average price of 35, you have a risk reward of at least 4 (35 x 4 = 140) even if the company went bankrupt.  Seems like a bargain to me.  

I look forward to blogging for you all next week!  See you then.  

 

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