A few days ago, I purchased some calls on QID (The ETF that 2x shorts the Nasdaq 100). Yesterday, the market reversed course near the end of the day, and QID, which had been way down all day, actually finished higher. This morning, as I write this, the Nasdaq futures are once again lower.
Here is the chart of QID, prior to the market open today:
Chart courtesy of stockcharts.com
Despite chart technicals that indicate QID could be ready to pop much higher, such as the rounding of the RSI, and lingering on the verge of a stochastic buy signal, I remain cautious. Mr. Bernanke (aka “The Candyman”, as I call him) and his crew of half a dozen, are about to meet and greet today. That’s always a challenge for the trader, and I don’t want my QID position to be caught in some kind of “twister” or QE3 full nelson, where the market goes up 300 points in the last hour and a half.
Whenever the FED meets, it’s always a strange day, and you have to be ready for anything. So I may sell into the QID strength this morning, take some profits and wait to see what is next. Worst case scenario, I sell too early, and best case scenario, I make a little money, while avoiding a huge loss.
I will gladly take that risk/reward ratio, and perhaps buy back into QID if and when we get a rally.
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