10/2/2019 Midweek update. Schwab will begin offering commission free trades on Monday 10/7. TD Ameritrade follows in Schwab’s footsteps one day later.

Hi everyone, welcome to the midweek update.

QQQ Monthly 10_2_2019.JPG

Above is the monthly chart of QQQ. Notice how even if you shorted at the perfect time and held it for a month, you would still be better off buying dips and selling when the market goes up. However, this current monthly candle is setting up for a good short position to be held for 1-2 months (until end of year). Note that this most recent candle is not accurate because the month just started.

Schwab just recently announced that they would begin offering commission free trades, so I’m excited to trade in my Roth IRA. I read online that brokers can easily make up commission losses by widening the bid/ask spread, so using limit orders might be the best workaround for that.

Following the Schwab news, TD Ameritrade (AMTD) stock dropped over 25%. TD Ameritrade announced today that they would also be offering commission free trades, but the stock continues to struggle. Below is the weekly chart of TD Ameritrade over the last 4-5 years. 

AMTD Weekly.JPG

The stock bounced off the 35 ish support level multiple times over the last couple days, but has now sliced through it. This chart is hinting at some sort of bounce soon as sellers will likely get out of the way. I think a long term position here (1+ year) would outperform the market, or at least the financial sector. Perhaps this is a good pairs trade opportunity (buy AMTD and simultaneously short XLF or SPY). 

See you sometime this weekend!

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