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Weekly Stock Market Wrap 10-12-18

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Weekly Stock Market Wrap 10-12-18

Technical analysis on the US stock market for the week ending Oct 12, 2018.

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2018-10-12T18:04:46+00:00Oct 12, 2018 6:04pm|Categories: Equity Market Analysis|Tags: , , , |2 Comments

2 Comments

  1. jbro61 October 13, 2018 10:12 am at 10:12 am

    Randy….thoughts on a inverse Nasdaq 100 long term hold? I’m thinking about something way outside the deviation (say SQQQ $22 at < $3 hold until 2021). Any thoughts to this longer term strategy? Considering the price is way outside of the current standard deviation anyways...think it might hold it's price even on a march up...so you really are paying for the duration.

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    • rsotc October 13, 2018 6:48 pm at 6:48 pm

      First of all, you don’t want to hold leveraged ETFs for any extended period of time, especially the 3x’s. The large-cap index 3x ETFs aren’t as bad as most sector 3x ETF as far as the decay & it’s even possible that SQQQ could outperform, given the right market conditions (a pretty persistent & steady downtrend) but very choppy or extended sideways market could cause SQQQ to return less than 3x the drop of QQQ. See the “Is there a disadvantage to holding a leveraged ETF for an extended period of time” under the ETF sub-section of the FAQ page (accessible on the main menu bar at the top of the site).

      As far a tucking away a short on QQQ for the next 2+ years, maybe. However, keep in mind that we still have the major stock indexes at or above some of the long-term trendlines & key moving averages. Additionally, most long-term trend indicators are still bullish despite the short-term trend (and almost the intermediate-term trend) flipping to bearish.

      One option would be to start scaling into a QQQ short (or PSQ, a non-leveraged, short QQQ ETF and QID 2x short is another option), buying in fractional lots over the next few months or even better, adding strategically (e.g.- on support breaks or rallies back to resistance).

      You would also want to remain flexible on that trading plan & identify where you will stop out if this market has a lot more upside left in the coming months+ as anything is possible. Other than that, I have to say that if I were forced to either go long or short QQQ for the next 2 years & throw away the key, I’d rather be short but again, never get married to a trade & always use stops.

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