The indexes are down quite a bit from last week. Yesterday the Dow Jones lost 831 points, Nasdaq 315 points, Nasdaq 100 327 points, and the S&P500 94 points. Across the board we are seeing carnage in the markets. This shows the downturn is broad based and not specific to certain industries or one index.
For this post I will focus on the QQQ which is an ETF that tracks the Nasdaq 100.
We saw the market peak back in January around the $170.83 level and found its bottom at $153.47. Then the QQQ peaked again close to the $170.83 level in February and reached its bottom close to $153.47 for the second time in April. This created a range that the market bounced between. In March the QQQ briefly made a breakout above the $170.83 level only to fall back down ten days later back into the range.
How do we explain the downturn we are seeing from this week? If you look at the $187.52 levels you will notice that the market turned down where I marked the first arrow. From there price fell down from $187.52 to as low as $180.44 which is a change of -3.77%. The peak was in August and found its bottom in September. The market revisits this level once again making a peak in October at $187.53 and as of now it is down 8.42%.
The key takeaways from analyzing this chart is that the market has memory. Peaks it reached in the past are often respected and so are the bottoms. The longer the market stays in a range so do the probabilities of a big move go up as each day passes. At this point if the QQQ goes below $170.83 it will break a key market structure that has been in place since July. Watch out below if that happens for more downside that we have seen this past week.
If I did not hedge then instead of having gains I would have massive losses. Risk management is key for a portfolio.
Portfolio: Holding on to the straddle for hedging and added on puts for the SPY(S&P500 ETF).
Market action: I am waiting to see how far this drop will take us. Hedging and adding puts on will take precedence for the time being.
For this post I will focus on the QQQ which is an ETF that tracks the Nasdaq 100.
We saw the market peak back in January around the $170.83 level and found its bottom at $153.47. Then the QQQ peaked again close to the $170.83 level in February and reached its bottom close to $153.47 for the second time in April. This created a range that the market bounced between. In March the QQQ briefly made a breakout above the $170.83 level only to fall back down ten days later back into the range.
How do we explain the downturn we are seeing from this week? If you look at the $187.52 levels you will notice that the market turned down where I marked the first arrow. From there price fell down from $187.52 to as low as $180.44 which is a change of -3.77%. The peak was in August and found its bottom in September. The market revisits this level once again making a peak in October at $187.53 and as of now it is down 8.42%.
The key takeaways from analyzing this chart is that the market has memory. Peaks it reached in the past are often respected and so are the bottoms. The longer the market stays in a range so do the probabilities of a big move go up as each day passes. At this point if the QQQ goes below $170.83 it will break a key market structure that has been in place since July. Watch out below if that happens for more downside that we have seen this past week.
If I did not hedge then instead of having gains I would have massive losses. Risk management is key for a portfolio.
Portfolio: Holding on to the straddle for hedging and added on puts for the SPY(S&P500 ETF).
Market action: I am waiting to see how far this drop will take us. Hedging and adding puts on will take precedence for the time being.