There is no “one-size-fits-all” strategy or exit plan for an underwater trade. Nor am I able to provide individual investment advice, although I can share some generic thoughts as well as my own preference when in a trade that’s underwater & I am second-guessing my trading plan/stop-level(s).

First & foremost is the old adage that says: “Sell down a position to the level at which you can sleep at night”. For some, that level might be zero (close the position); others might take a position they realize they went too heavy into, but they still believe will pan out and/or is still above their stop-loss and/or within the trading plan parameters, and reduce that down by selling some of the shares.

When I find myself in a losing position, or even a profitable trade but one that I’m starting to second-guess, maybe because something has changed in the technicals or the trade has become ‘dead money’ while grinding around aimlessly, I will often set (or raise) a relatively tight stop below the most recent low & let it ride.

If the stop is hit, so be it & I move on to the next one or wait for the next objective trading opp to set up on that security. If the trading gods are smiling down upon me, the stop won’t be hit & the trade will go on to reach my price target(s).

To each their own, but I would encourage anyone to always make sure to A) be diversified, whether an active swing trading account or an investment portfolio. That includes making sure that a dozen or so different positions don’t have a high correlation.. B) Avoid the use of leveraged ETFs, especially 3x, unless you have a very high degree of confidence in a mostly uni-directional (up or down) trend. Even if that was the case at the time of entry, recognize when to pull the plug and/or switch to the non-leveraged version (e.g., a short on SOXX vs a long on SOXS).

Remember, until QQQ clearly takes out T1 on the 60-minute chart, this is & will remain the bottom of the multi-month trading range that both the $NDX & $SPX have been grinding around in (or they make a solid & SUSTAINED upside breakout). Semis are tech stocks & components of both those major indices.

shorting SOXX or SOXS is very dangerous. You need to time it perfectly especially after pulling back so much already. A big risky to hold thru mega cap tech earnings. I would cut your losses or at least reduce your position. The way SOXX bounced off of 539 this morning was very bullish given it gapped up yesterday to same spot. Filling the gap doesn’t seem to be in the cards for now. Wait to see how day ends and decide. Google earning are after hours today!!

Very interesting. Thanks for passing along!

Thx for passing it along. I’ll be away from my desk the better part of this morning but will take a look and share my thoughts when I get back around lunch time.

Van Ek semiconductor ( not philly index) SMH

If my math is correct and SOXX hits 585 that would be a 15 to 16% drop in SOXS from the closing area around 45 that would be a 7.0 drop. A lot of people are probably shorting right at this level so they’ll try to pop it (SOXX) and blow out the weak hands either overnight or tomorrow morning.

The big moves in SOXS that tend to be near support seem to happen after hours taking the retail trader who doesn’t trade futures to the cleaners or causing them to miss out and pull their hair. I used to be one of them.

Not for nothing, but I tend to look at the Philadelphia semiconductor index rather SOXX for support levels.

And you also have to realize that SOXS is rebalanced every day at closing so the closing number can mean an entirely different thing once trading starts again. I’ve noticed that they are using SNDK as a proxy to move the needle on either direction while they harvest from the other chips.

..and the previous 2 posted 60m charts of SOXX:

I’ve repeatedly discussed how SOXS is among the most vicious of culprits of the entire spectrum of leverage ETFs when it comes to decay during anything but uni-directional trends (i.e.- periods oscillating between green & red daily closes) due to a combination of the -3x leverage coupled with the fact the semis are about the most volatile of all stocks/sectors within the major indices.

SOXX continues to zig-zag lower in a clear near-term downtrend with objective short entries, add-ons, or re-entries on this bounce back to the 555.40ish resistance and/or the 586.64ish resistance above.

As stated recently, until & unless QQQ clearly takes out that T1 price target/support zone on the 60-minute chart, the $NDX, along with the broad market/$SPX, remains in a sideways grind that is starting to approach the 3-month market. SOXX (and SOXS) is unlikely to start falling in a mostly uni-directional downtrend until & unless QQQ & SPY both solidly take out the bottom of their respective multi-month trading ranges, simply because the bulk of the semis (and the largest ones) are components of QQQ & SPY.

Here’s the 60m chart of SOXX highlighting the unmistakable near-term downtrend it’s been for the past month since the June 22nd top.