Ouch! Thank You Sir, May I Have Another? Ouch!
The Fed neither surprised nor disappointed when today it concluded a two day meeting and released its statement on monetary policy, saying that the FOMC has lowered the Fed Funds rate 25 basis points and shifted the statement of risks from the previous focus on economic weakness to a balance between risks to economic growth and inflationary concerns.
The market initially declined on the news before spiking to new highs on the day and post-bear market, all time highs for the NDX and Nasdaq.
I’m in between a rock and a hard place on my QID position. My short term indicators are screaming overbought while the rising wedge on the NDX has, unconventionally I might add, broken out and up and my risk tolerance is beginning to wear very,very thin.
Through proper position-sizing no one trade will ever do material damage to my overall trading capital yet I do not like to deviate too far from my normal draw down rules — and this monstrosity of a QID trade is inching very close to “too far”.
My plan is to hold one more day. If tomorrow the NDX does not trade below today’s lows, I plan to close the trade and take the loss.
On a separate but related note, the Nasdaq Composite Index is at the 1999 “flash point” that kicked off the historic five month, sixty-six percent bubble run from 3000 to 5000. Looking at it from a different vantage point, the Nasdaq has officially traded almost perfectly flat, aside for a little volatility inbetween :), for seven years.
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