I hope you are all having a great weekend so far.
Markets jumped this week, and my Boeing and Marathon Oil shares spiked roughly 40%. My plan to sell Boeing at 240+ is still in place, although since it went up so fast, I now have a tax dilemma. Since I’m a dependent and need to pay my parent’s tax rate, my short term capital gains taxes are much higher than my long term capital gains taxes. I really don’t want to sell Boeing before March of next year, since it’ll be a year from when I bought it. I’m currently thinking about selling multi-month long calls if Boeing reaches 240.
Weekly chart of Boeing below:
Now let’s look at the charts of QQQ and SPY.
Weekly chart of QQQ below. For the short term ONLY, I think it’s a good time to start taking profits (selling) or if you are more aggressive, to go short. If I was swing trading QQQ, I would 100% sell here and potentially start a small, counter-trend, short position.
For the short, we would target a profit exit near 210, with a stop loss at no higher than 250. Since this is a tight stop loss, it could easily get triggered. As a result, taking a small position here and then planning to average down (shorting more at a higher price) gives our trade more room to run.
SPY weekly chart below:
Like the QQQ, SPY is setting up for a big bearish RSI divergence. Because of this along with the fact that it’s hitting resistance near the bottom of the gap, I would be selling here 100% of the time as a short term trader. However, shorting here against the upward momentum might not be optimal, although it wouldn’t be an unreasonable trade either.
I hope you enjoyed the commentary and see you next week!