QQQQ

[David Randolph]

According to the article Riding the Storm I will sell QQQQ (Nasdaq 100 tracking stock) short tomorrow around the open. As always, 6.66% of the 3 Stocks on Fire Portfolio.

Being short on the SPY and QQQQ will make me always alert to the general market trend, as I will update this analysis everyday.

Probably tomorrow we'll have an higher open, with people feeling better for the new year, and that will be a perfect short term selling opportunity. Anyway, rebounds will come along the way, but I'll keep monitoring the position for hold shorts/buy to cover decisions.

[jorgegr]

David:

If you are going to short QQQQ what strike  and expiration date are you suggesting or
even better, what specific symbol will you book???
THX 
jorgegr

[David Randolph]

David:

If you are going to short QQQQ what strike  and expiration date are you suggesting or
even better, what specific symbol will you book???
THX 
jorgegr

I will sell the stock short (QQQQ), not buy a related put option.

[metro]

Today I have made some contrarian posts as it is good to look at both sides but also as I think that it is too early for the market to make much of a pullback. The 4 year cycle is not quite here and the earnings will start in a few weeks.

I may turn bearish when I see less great stock charts and more failed rallies or maybe when the OEX traders turn bullish.

The QQQQ were at the 38% retrace after a low volume pullback at the end of the year. This did not hurt the buying pressure really as you can see the positive divergence on the on balance volume.

It is possible this will turn out to be a bull flag but we need to see the stochastics break the trend line. Like others the 50-day has held up.

To me the general feel of the market only helps in that it makes me more of one way to the other so now I am bullish and am not shorting anything but swings in the DOW futures.  Many stock pulled back in the last few weeks and have build nice little bases so we may have a decent market for a few weeks.

Fortunately we are not like mutual funds who can not change their position quickly  - Most of us can change out positions easily if the markets break up or down..

[berloga]

Metro, you may be right in the microscopic sense, but what makes a great trader is an ability to see things on a grander scale. Would you rather make a decision and then wait for 3 months and cash in 50%, or rather fidget momentarily and lose 15% (like I used to recently)?

  Walmart lost ground today. Just wait and see consumer agility reports to come out in late January-February. Although you can make money in the short term long, it will be a short while before the bears wake up.

  QQQQ just made us a precent today to be shorted at a more favorable price.

[shawFund]

From today's market action, we will see bullish trend for the week.

January effect will take place as many tech stocks sold off last month.

May be, better time to short the market is next month.

Unless the comany earnings are really bad during upcoming earning release season,
I will not short any stock. I see too many good stocks to own at this price level.

[stocky]

I too think that the time to short is not ripe. Though it seems that the big money is selling to the retail.

In confusing times like this I would either add some resources/biotech [read defensive], or sit out. Willing to miss the boat if my neck is on the line

[willey]

Hi David,

Market breadth has improved markedly ( these last two days ).  New accumulation in many stocks is ocurring now!  The markets are poised for significant breakouts!!!!

Shorts will likely be slaughtered!  It pays NOT to be short at times like this in the markets!

willey

[AussieTrader]

Quote Willey: Shorts will likely be slaughtered!

Well, not if they have their stop losses in place, they'll just suffer a trading loss

Anyway 2006 certainly has started with a bang and a lot of charts continue to look good and breakout. David's article regarding his bearish attitude is still very much valid and we should all maintain the usual caution whilst going long or short.

For the QQQQ, it has broken out of short term down channel nicely, it would appear to be setting up another go at 42 resistance, the question will be if it can breakout at 42 or whether that resistance will hold. If you are in bearish mode shorting around there with a stop just above the spike high of 42.31 (and above upper bollinger band) might be a decent low risk play.

Lets see how this plays out, for me I am undecided, but will short at resistance or buy on breakouts as usual.

[David Randolph]

Thanks for you comment on my absence Aussietrader, I was really sick yesterday 

Every year is the same thing, the media talks about the January effect, how the first day of the year tells you about the first week, the first week about the whole month, and the whole month about the whole year !

It would be so easy to predict the market if this were true ... was the first day positive? Yes, you can buy for the entire year lol.

This reasoning can be used by big players to deceive the public, pushing the market in one way, everybody follows the move, and then reverse that move.

I feel nothing has changed on my bear case, though I have a 2.61% loss on QQQQ. But of course I'll respect the market and I won't let this loss grow much more. For now I'll just say I'll keep on holding my short position on QQQQ, I wonder if the market won't react negatively after a higher open today?

[willey]

Hi David,

Today is probably the LAST chance for shorts to cover their positions without serious losses beginning!  The U.S. stock markets are very likely to join in upsides with a 'seriousness of purpose' that'll amaze many!

NAZ to 2600+

Dow to 11,500+

...but, what do I know?

good fortune to all...

willey ( REDF likely to go to $25 & maybe $30 in 2006 )

[David Randolph]

Hi David,

Today is probably the LAST chance for shorts to cover their positions without serious losses beginning!  The U.S. stock markets are very likely to join in upsides with a 'seriousness of purpose' that'll amaze many!

NAZ to 2600+

Dow to 11,500+

...but, what do I know?

good fortune to all...

willey ( REDF likely to go to $25 & maybe $30 in 2006 )

Thanks for your view willey  You know I'll be here whatever happens. I truly believe you're wrong and I have presented my case. Now the market will tell (give it two weeks).

[willey]

Hi again, David...

Oh-kee doh-kee,

You been warned!  Friday the QQQQ's break up into a runaway gap to amaze a heck-of-a-lotta shorts!

...but, what do I know...

;-)))

willey

[David Randolph]

I would like to see an higher open on QQQQ, above $42, and then a close below $41.70, completely engulfing yesterday's white candle.

That would give strength to my bearish case and I could start building some more short positions. But at this time I don't feel enough courage to go against the trend (courage often doesn't pay in the stock market), just on very selective picks like the RRI short.

If QQQQ closes 2% above the prior high of $42.31, that is, if it closes, say, above $43, I'll conclude that I was wrong, at least on the short term, and I'll assume that mistake by closing my position at a small loss.

At this point my bearish case isn't damaging me much, even though the market is rising, because I am underinvested and I have some good enough long positions. The 3 Stocks on Fire Portfolio performance is at the exact same point before I started my bear campaign.

It is a good thing when you're able not to lose much when you're wrong, and win big when you're right. I'll wait some more time for the market to confirm my views so I can invest more heavily, or to bail out of these general market short positions, in the case that I'm wrong.

Let's see what today brings, my bet goes to gap up at the open and close below $41.70 on QQQQ. I'll continue holding my short position.

[netfishmademerich]

I shorted some QQQQ just now.  Hope this gives the bears some mojo.