Friday, May 22, 2009

QID Stop Placement

Click on Chart to Enlarge

I updated the standing orders section to indicate placing a "breakeven" sell stop on QID. The specific price will vary person to person but should be below 37ish if you got in Wednesday. I am placing the blog stop at 36.86. At this point I think there will most likely be a push to lower lows before that stop could be hit, but I don't see any sense from a trade management perspective to let this trade go for a potential loss, so let's just put the stop in and see what next week brings.

I suspect that a mini rising wedge is forming now which most likely has very limited upside, and would also likely lead to new lows before a potentially larger move up toward recent highs. Also the chart above shows SPY with a 30 min stochastics which is in overbought territory at a lower level than the previous signal, indicating a short-term down trend is likely still present.

As a side note, I am not going to show the chart here, but today looks very likely to be the first time since March that the VIX has closed 2 consectutive days above the TSF 63 line which I have referenced previously. The last couple times it closed above the line, it fell below it the next day. So that should be another indication of potential market topping and the VIX finding a floor or starting an uptrend.


1 comment:

  1. The rising wedge scenario looks to be good and confirmed complete with the speedy and total retracement of the last leg up already before the close.

    That could allow the stop on QID to be moved up to 37.34 if you are so inclined.

    This pattern argues for downside early next week. But if there is, I think it would lead to another decent rebound attempt, possibly even tradable for the blog.