QID Trade Idea
For the second week in a row, Trade Ideas technology is not seeing an edge for any specific long strategy. For those that monitored our A.I. “Holly” last week, you saw little to no action at all for most of the week. If the A.I. is not seeing an edge to go long, this is a “canary in the coal mine” moment for us to study. Recent daily charts of (SPY) and (QQQ) show possible distribution taking place. Distribution is the footprint of institutional selling with high volume over a few scattered long red -candle down days. The Trade of the Week is to buy ProShares UltraShort ( QID ) to establish a defensive short position should the market deteriorate further this week.
The trade is considered live above Friday’s high of 16.62. If you currently have some long positions open, you could consider this trade idea as a hedge for your personal portfolio.
Trade setup for QID
The daily chart of QID looks much like many of the “Trend Change Lubricant” scans that have worked in the past. Only this time we are using an inverted ETF (with some leverage) to participate. The suggested target for this position is the gap fill at 18.95. The suggested stop will be 15.60. So we are risking roughly $1.00 to make $2.30. The entry trigger of 16.63 will be live and open for the entire week.
Footnote: This is a table showing the maximum profit for past 2017 Trades of the Week. Timing the top is impossible but this table shows how much alpha was possible when considering your personal exit of these positions. The trades outlined in red eventually hit their suggested stop prices, so you can see the importance of timing and harvesting profits along the way when you can, especially those that move above 10%. We will update this table when needed to bring data more up to date.
Targets are not absolute. Targets involve timing. Profits can and should be harvested along the way.
Risk to Reward ratio ideal is 1:3
Trades of the week that do not reach entry prices are not considered live and are expired at the end of the current week. (ORCL, HLF and JNPR)
TOW Rules: 20% Rule. If a performance is up 10% and gives back 20%, take the 8 and run. (Profit Save, Trailing Stop).
Stocks that gap up over the entry price are considered up to the discretion of the buyer as to the entry price (WETF)