Hi everyone! Let’s look at charts for DIA, SPY, and QQQ.
If you prefer trading with the trend, it’s probably a better idea to wait for a pullback in the indexes, then go long for a better risk reward ratio. If you are aggressive, you may decide to short DIA with a target of about 251-253, and a stop loss near 262.
The SPY, which tracks the S&P500, also has the same gap as DIA. Staying long here in the short term doesn’t make much sense, so I recommend either selling now and waiting to buy on a dip, or going short here.
I originally mentioned that QQQ would be the top choice to short, but now it looks much stronger than the other indexes. I’m neutral on the index with a slight lean towards being bearish still. However, I would short DIA or SPY instead of QQQ at this point.
Today’s post will be more detailed since we haven’t had one of those in a while. I had a summer class and relatives/friends over so I had quite some stuff to do. I also recently started playing a lot of poker cash games (No Limit Texas Hold’em).
Below are the daily charts of the indexes:
The chart of QQQ is above. Notice that we’ve made a new all time high, but the RSI indicator did not make a new high. This RSI divergence suggests lower prices ahead (within the next 2 weeks). I plan to short QQQ near 185 with a target near 178, or slightly above 178. The stop loss will be about 3 dollars above my short entry. This is a risk reward of about 3 to 1.
The SPY 500 is looking more healthy than the QQQ. This new high is confirmed by an RSI with a similar reading on the previous high. Although I’m slightly bearish on the SPY, I wouldn’t short it, and would rather short the QQQ.
The DIA chart looks similar to the SPY chart, so I won’t waste your time discussing it.
MU has been a great trading vehicle for me over the last year or so. Anyways, I mentioned that I would be looking to aggressively buy in the 46-50 range (suggesting on the lower side), and that has proven to be a good plan 🙂
However, something concerns me with this chart so I no longer have a position anymore. The last three times MU rallied off a low, it retested that first low and then recovered. I’ve drawn those three rallies in on the chart above. Notice how the length of those moves are about 6-7 dollars each.
I suggest selling your entire position here (as a swing trader) and look to buy below 49 again (preferably near 46). I also think that this may be the start of a new downtrend, so you may want to avoid buying MU for the long haul. Of course, you can still swing trade it back up (or down).
Thanks for reading, and have a great week!
BABA bounced near the buy zone I mentioned last week, but I did not catch the jump up and still have no position. I will see if it looks attractive after earnings this Thursday.
MU is at a strong support level, and I expect it to bounce. I have not decided whether or not I want to take this trade.
This week’s update was also short and sweet because I’ve been taking less trades (and hopefully better ones).
Hi all! Nothing too exciting has happened in the last week so this week’s discussion will be short.
I still like Facebook (FB) for the long term hold (1 year +).
As for BABA, I’m getting ready to buy it for the week before earnings since it seems to go up the week before earnings every time.
I also plan to short QQQ if we retest the 182.5 – 183 level with a stop loss about 3 dollars above and a profit exit 9-10 dollars below my entry.
Good luck trading!
FB jumped about 4.5 today, which was good (for me at least).
QQQ is approaching 182.5 again which is where I was stopped out last time. I plan to reshort at that price most likely.
Lastly, I plan to buy BABA next week in anticipation of a pre-earnings run up. It seems like it always moves up the week or so before earnings. The earnings date is 8/23 (two Thursdays from this Thursday).
I plan to buy BABA somewhere in that rectangle support area, and sell the day before earnings. I will have both a hard stop loss, and a time stop loss (selling before earnings no matter what). This will reduce the stress from deciding when to sell (for a loss or gain).
See you next week, good luck trading!
Nothing has changed much since last week in terms of my overall outlook on the market.
Unfortunately, I was stopped out of my QQQ trade right near the peak. However, I plan to reshort it if we get a pop back to the 182 ish level.
I decided to add a medium sized position in Facebook (FB) in my retirement/long term account after the 20% drop last week. I plan to add another position of the same size if we hit 150. I plan to hold for at least a year.
I bought my first batch of FB at 175, and plan to add another batch at 150. My target is 250+.