Where Are The QQQs Heading Next??? – Part 2
Invesco QQQ is an exchange-traded fund based on the Nasdaq-100 Index. QQQs is one of the most traded ETFs in the world and includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization.
Two months ago, I talked about the QQQ. This was probably one of the first times in a post, I ever went down to very small time frame, the 15 min chart to be exact. And all I was seeing was pending sell orders at many different levels.
Where Are The QQQs Heading Next???
I realize the Markets are up 10% since the Christmas lows. I realize some folks on Wall Street think we will reach new highs. I realize some folks on Wall Street thinks the economy is still very strong and in a secular bull market. I realize price has penetrated the 2018 Feb and Oct lows resistance line.
But I also know price has not revisited those 15 min supply zones yet and that price as only deteriorated, evidence by the additional daily supply zones.
Let only the Head and Shoulder pattern that formed in recent months.
So where is QQQ headed next? The chart suggests another leg lower.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Looks like a nasty one lower too! The symmetrical move lower would make it be a tough run down to multi-year lows if I interpreted right.
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In Dec we already exceeded the measured move. Nevertheless, lets see if price can get pass the right shoulder....will be interesting...I have my popcorn.
Now for the investing hat - which constituent stocks to hold onto and which ones to bale out of? I have my hedges in play with February and march expiries. I am quite light on Nasdaq stocks with some exposure to chip stocks and cloud computing. I will review the chip exposure (all small) this week and focus in on the long run winners.
The pundits say Tech is on sale. If the Markets are going higher, Tech has to lead the way. I haven't seen enough strength yet, in particular the chip stocks. Micron was upgraded recently, Nvidia is catching bids, but the the ETF, SMH continues to break down.
So far Netflix is is leading the FANG stocks higher, Google has held up pretty good.
My bias is still to the short side, thus how are you hedging, are you buying puts, selling covered calls? Thanks in advance.
I remain long in cloud computing (salesforce.com. VMWare and Workday). I am holding onto a few chip stocks (AMD and Micron) for the long haul. Last report I saw showed a potential bottom for DRAM prices. I have a few others - which I will review if I have time this week (AMAT. TXN, ADI, CRUS, CY) but they are all small holdings.
As for hedging I have been doing bear put spreads on QQQ. Set up is 2 or 3 months away. Bought put one strike out-the-money best bought on an up day. Sold put is 5 to 7% away and looking for a 200% profit potential. Looking to cover 5 to 10% of my portfolio value.
Now I did also put on a bull call spread on SQQQ on an account I cannot hold short positions. I bought the stock and then set up the spread as a call spread. Same principle - the spread can be closer together because of the leverage. Noticed a bonus - the SQQQ ETF actually paid a dividend this last quarter. Bonus
Using a naked put can also work as a hedge if you are comfortable (and have cash) buying in at a lower price. Like I did with McDonalds. Pick a level from the charts that you think is below the bottom and see if you can sell a put at that price - say 2 to 3 months out. Be aware of earnings dates and falling knife risk.
I continue to be amaze how you juggle it all.
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