4/27/2019 Off to new highs! QQQ still outperforming DIA.

QQQ weekly 4_28_2019.JPG

Please take a look at the QQQ weekly chart above. It has been 18 weeks with only one significant down week, and although QQQ is overbought and due for a drop, these upward moves can go on for a very long time. Since momentum is still pointed up, selling or going short doesn’t make much sense. Buying here is a little bit risky as well, so it might be best just to hold your current positions (or trim them) and look for future developments hinting at a peak.

Like I’ve been suggesting over the last month, buying QQQ and shorting DIA is a good, low risk pairs trade that I still recommend. 

See you next week! 

Advertisements

4/21/2019 QQQ breaks to new all time highs while SPY stays flat. Looking like more upside next week, but watch out for the weekly RSI divergence.

Hi everyone! Welcome back. 

Most indexes continue to rise, and I think we will go up next week as well. Something to watch out for is the weekly RSI divergences which hints that we are at a medium term high (weekly chart means more medium term). Logically, we have gone up a lot since December of 2018, and are due for a correction. However, markets don’t always move logically, otherwise we’d all be rich. 

I think we drift higher in the short term (a week or two), but I think we will close lower 8 weeks from now (end of June).  

Below is a chart of the QQQ with the weekly divergence highlighted. 

QQQ Weekly 4_21_2019.JPG

4/6/2019 Stocks continue upwards march towards new highs. We have broken above local resistance and I suspect we move higher in the next few weeks.

Hi everyone. Despite my bearish calls in the last few months, stocks continue marching higher. 

QQQ has broken above the high from 2 weeks ago, so I think we will move higher.

If you want a lower risk trade, I recommend shorting DIA (the Dow Jones), while buying QQQ. This pairs trade capitalizes on technology stocks outperforming the Dow Jones. 

QQQ Weekly 4_6_2019

QQQ has strong upwards momentum on the weekly chart. 

3/31/2019 Stocks close out the last week of March relatively strong.

Hi everyone, I hope everything is going well!

I will discuss some key price levels for the indexes.

DIA Weekly 3_31_2019.JPG

I’ve highlighted some key support and resistance levels on the DIA. We are currently at the upper end of the 252 to 260 range. Although this could be the start of a bullish flag pattern, I think there’s a better chance we move towards 252 and break down lower. However, I wouldn’t take a trade in either direction until the index moves above 260 (go long) or below 252 (go short). 

I still don’t think the indexes will make new all-time highs this year, and even if we do, I don’t suspect we will hold those levels since the P/E ratios of the S&P500 are well above its historical average. 

PE Ratio S&P500.JPG

 

For QQQ, the local resistance level is at 187 (all time highs), and 291 for SPY (also all time highs). Like I discussed in previous weeks, shorting DIA and going long QQQ would be a lower risk “pairs trade.”

 

 

 

3/24/2019 Indexes whipsaw and most of them drop. Futures point to a drop on Monday.

DIA Weekly 3_24_2019.JPG

 

SPY Weekly 3_24_2019.JPG

 

QQQ Weekly 3_24_2019.JPG

Above are the three major indexes on the weekly chart. They are in order of weakest to strongest (from top to bottom). I suspect volatility will pick up now, and since futures are down right now (midnight Eastern time), I think we move down lower tomorrow and into next week. 

I still like the pairs trade idea to short DIA and go long QQQ. 

I think this price stall at resistance is the perfect opportunity for the bears to short. I think we’ve finally hit a local top and will continue lower for the next month. Of course, a move above the most recent resistance should have you stopped out.

If you want a lower risk trade, you can try the trade I suggested above.

Good luck trading, and see you next week like always!

3/17/2019 Stocks continue much higher despite hitting resistance. I still wouldn’t be buying at these price levels (for the longer term).

DIA weekly 3_17_2019.JPG

Notice how despite last week’s drop, DIA continues to push upwards. I still don’t think this is a good price level to buy at if you plan to hold for a year or more.

QQQ weekly 3_17_2019.JPG

Technology stocks surged over 4% this week, which you can see in the weekly chart of QQQ above. I think QQQ will outperform relative to the DIA, so a possible trade would be to short DIA, and simultaneously buy QQQ. 

See you next week!