BROAD STOCK MARKET TRADE ALERT (3:30 pm EDST)
As I discussed in yesterday's blog, it is looking like the broad stock market's current trend is bullish. Nevertheless, we are expecting some sort of correction down at this time. I suspect that correction will be brief and not too serious, although there is a chance it could snowball into something bigger. A corrective drop in the NASDAQ at this time could be in the 4-5% range.
Today the DOW and S&P 500 both made new all-time highs while the NASDAQ remained below it's all-time high (15,403) which is continuing our bearish divergence signal. Furthermore, all three indices are closed in the lower third of their day's range. This is a strong sell signal. This may be a worthwhile short-term short sell trade as our stop loss would be based on the NASDAQ making a new all-time high (which is very close). A short index fund tied to the NASDAQ would be the most profitable vehicle for this trade. I am going to enter a short position in the NASDAQ today with a tight stop loss based on the NASDAQ making a new all-time high above 15,403.
Note: This will probably be a very short-term trade that we will unload quickly if the correction moves into the 4-5% range or if we get stopped out by the NASDAQ breaking its all-time high. Longer-term traders may wish to stay on the sidelines and ignore this likely modest correction. There is a chance, however, that the correction could become more serious, which is another reason for doing a short trade here.
As I discussed in yesterday's blog, it is looking like the broad stock market's current trend is bullish. Nevertheless, we are expecting some sort of correction down at this time. I suspect that correction will be brief and not too serious, although there is a chance it could snowball into something bigger. A corrective drop in the NASDAQ at this time could be in the 4-5% range.
Today the DOW and S&P 500 both made new all-time highs while the NASDAQ remained below it's all-time high (15,403) which is continuing our bearish divergence signal. Furthermore, all three indices are closed in the lower third of their day's range. This is a strong sell signal. This may be a worthwhile short-term short sell trade as our stop loss would be based on the NASDAQ making a new all-time high (which is very close). A short index fund tied to the NASDAQ would be the most profitable vehicle for this trade. I am going to enter a short position in the NASDAQ today with a tight stop loss based on the NASDAQ making a new all-time high above 15,403.
Note: This will probably be a very short-term trade that we will unload quickly if the correction moves into the 4-5% range or if we get stopped out by the NASDAQ breaking its all-time high. Longer-term traders may wish to stay on the sidelines and ignore this likely modest correction. There is a chance, however, that the correction could become more serious, which is another reason for doing a short trade here.
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