4/14/2019 Most indexes drift slightly higher. Dow jones (DIA) underperforming Nasdaq (QQQ), and I think this will continue to be a good pairs trade.

QQQ weekly 4_14_2019

DIA weekly 4_14_2019

Above are QQQ and DIA on the weekly chart. We have approached all time highs and I suspect we will make new all time highs next week. Either way, I recommend buying QQQ and shorting an equal dollar amount of DIA for a low risk pairs trade. 

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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! 

3/10/2019 Indexes post relatively large weekly losses after retesting February 2018 highs. I think there’s a very good chance we close lower next week.

Greetings! Let’s look at the Dow Jones chart since we talked about it last week.

DIA Weekly 3_10_2019.JPG

Here’s the weekly chart of DIA, the index that tracks the Dow Jones index. Since we have seen confirmation of selling near the supply zone, now is a good time to sell or go short if you are a short term trader. I’m guessing we will drop to the low 240s in a month or so, which would be retracing half of the previous move up. 

The lowest price in the last few months was about 215, with the highest near 260. So that’s a climb of 45 points. Half of that climb is about 22 points. 260 – 22 is around 240. 

3/3/2019 Stocks up a little this week. Dow Jones approaching all-time highs (up 10 weeks in a row). Bearish on Dow Jones short to medium term now (from neutral).

Hi everyone, welcome back!

Today I want to analyze the weekly chart of Dow Jones (DIA)

DIA weekly 3_3_2019.JPG

Last week I highlighted a possible weekly divergence on the indexes, and it looks like although Dow Jones has gone up 10 weeks in a row, there’s a much better risk-reward skewed towards the downside.

This represents a good short opportunity.

Notice how the RSI keeps getting lower despite the index making new highs. This displays weakening momentum. I think shorting near 265 with a stop loss near the 270 range is a good trade. Your profit exit would be in the 245-250 range, depending on how greedy you want to get with your risk-reward 🙂

See you next week.