I received the following question regarding the TECS / XLK Active Swing Trade: "Randy what are your thoughts on the official TECS trade at this point? If we see that last thrust up in the market next week, that will most likely trigger the stop on TECS as we are quite close to it already. As we’re expecting a move down afterwards, it might make sense to suspend/lower the stop?" to which I replied:
Although it’s getting close, I’m going to stick with the original suggested stop of any move below 11.40 on TECS although at most, I might revise that to a daily close below 11.40 instead. While the tech sector (XLF) has only gained just over 4% since the short entry, it has been shrugging off all of the bearish technical developments so I’d rather let this one go with relatively minimal losses, should the stop get hit, than allow for additional losses that are not inline with my profit expectations at this time.
Upon reviewing the charts of XLF & TECS today (I mainly focus on the charts of the non-leveraged ETFs when trading the leveraged ETFs due to the price distortion over time from the decay in the latter) I have decided to make a slight revision to the suggested stop from any move below 11.40 on TECS to any daily close below 11.40. One of the reasons for giving this trade just a slight bit of extra room is the fact that we have potential negative divergence forming on both the daily time frame as well as the 60-minute time frame which would be confirmed soon if XLK reverses or even stalls out for a couple of days. From the look of the 60-minute chart, I can see the possibility of a slight thrust higher which would still keep those divergence in tact as shown on the chart below. Price targets remain as originally posted for now.