A NEW IDEA ON LEVERAGED INVERSE ETF SQQQ
SQQQ goes up when the market goes down. Since this is a leveraged ETF, the position size is one-third of your normal position. The recommended position size is up to 7% of full core position size, but reduce it based on your own risk preference.
This is suitable only for super aggressive experienced investors because the risk of loss is high but rewards are also high.
This is a short term trade. The buy zone is $19 to $20.27. it is trading at $20.27 as of this writing. Stop zone is $17.11 to $18.23. The first target zone is $24 to $25.68. The second target zone is $27 to $32.
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200,000 Deaths
Dr. Fauci says there may be 100,000 to 200,000 American deaths due to coronavirus.
The stock market is discounting (assuming) less than 25,000 deaths.
The 80% probability of the 'mother of support' zones holding that we have been sharing with you is based on the model at The Arora Report that is assuming 100,000 - 150,000 deaths.
Trump Relents
Trump has relented on opening the country by Easter. He has extended social distancing to April 30.
Science May Triumph
At one time futures were down 4%. A lot of buying is coming in on potential good news on the science front.
We all want coronavirus to end. It is the government’s job to spin the reality to keep the morale of the country up. It is the prudent investor’s job to discern the truth. Science may triumph and cause the stock market to bottom.
Where Is The Bottom?
The mother of support zones has 80% probability of holding – this along with RSI should be the main reference points to look for a bottom. There is simply too much optimism in the stock market and in many cases investors are buying without doing research. Here are a few examples:
- Abbott Laboratories (ABT) has come up with a coronavirus test that takes five minutes. The revenues from coronavirus test will dwarf against the revenues Abbott is likely to lose due to issues related to coronavirus. Investors are running up the stock.
- Johnson & Johnson (JNJ) is making great progress on a coronavirus vaccine. Johnson & Johnson is likely to sell the vaccine at cost. This will have no material increase in earnings yet investors are running up the stock.
- General Motors (GM) will make ventilators. General Motors is selling them at cost. Again this will have no impact on earnings yet investors have run up the stock on the news.
- Medtronic (MDT) makes ventilators but ventilators are a very small portion of its business. At the same time, Medtronic is suffering because its sales are likely to drop due to postponement of none essential surgeries. Without understanding the whole picture investors have run up the stock.
The foregoing shows that there is simply too much optimism and investors are buying without doing research. In my over 30 years, I have never seen a bottom when investors behave this way.
This is suitable only for super aggressive experienced investors because the risk of loss is high but rewards are also high.
This is a short term trade. The buy zone is $19 to $20.27. it is trading at $20.27 as of this writing. Stop zone is $17.11 to $18.23. The first target zone is $24 to $25.68. The second target zone is $27 to $32.
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200,000 Deaths
Dr. Fauci says there may be 100,000 to 200,000 American deaths due to coronavirus.
The stock market is discounting (assuming) less than 25,000 deaths.
The 80% probability of the 'mother of support' zones holding that we have been sharing with you is based on the model at The Arora Report that is assuming 100,000 - 150,000 deaths.
Trump Relents
Trump has relented on opening the country by Easter. He has extended social distancing to April 30.
Science May Triumph
At one time futures were down 4%. A lot of buying is coming in on potential good news on the science front.
We all want coronavirus to end. It is the government’s job to spin the reality to keep the morale of the country up. It is the prudent investor’s job to discern the truth. Science may triumph and cause the stock market to bottom.
Where Is The Bottom?
The mother of support zones has 80% probability of holding – this along with RSI should be the main reference points to look for a bottom. There is simply too much optimism in the stock market and in many cases investors are buying without doing research. Here are a few examples:
- Abbott Laboratories (ABT) has come up with a coronavirus test that takes five minutes. The revenues from coronavirus test will dwarf against the revenues Abbott is likely to lose due to issues related to coronavirus. Investors are running up the stock.
- Johnson & Johnson (JNJ) is making great progress on a coronavirus vaccine. Johnson & Johnson is likely to sell the vaccine at cost. This will have no material increase in earnings yet investors are running up the stock.
- General Motors (GM) will make ventilators. General Motors is selling them at cost. Again this will have no impact on earnings yet investors have run up the stock on the news.
- Medtronic (MDT) makes ventilators but ventilators are a very small portion of its business. At the same time, Medtronic is suffering because its sales are likely to drop due to postponement of none essential surgeries. Without understanding the whole picture investors have run up the stock.
The foregoing shows that there is simply too much optimism and investors are buying without doing research. In my over 30 years, I have never seen a bottom when investors behave this way.
Trade active
Trade active:
Two Painful Weeks
Trump says, “This is going to be a painful two weeks”. The stock market falls on Trump’s comments. However the same stock market previously went up when Dr. Fauci said 200,000 American deaths could happen. The stock market is complex – sentiment, positioning, technicals, short squeezes and other shenanigans tend to overrule the facts. Here is the key question for investors, ‘Will the ‘mother of support zones’ in the stock market hold?
It is important to note the top four holdings of QQQ are Apple (AAPL), Microsoft (MSFT), Amazon (AMZN) and Facebook (FB). The top four holdings of ETF SMH are Taiwan Semiconductor (TSM), Intel (INTC), NVIDIA (NVDA) and ASML Holding (ASML). The reason it is important to note the top holdings of these ETFs is because investors are hiding in them and similar stocks.
There is merit to hiding in the stocks names above because these companies have solid balance sheets and are likely to recover quickly.
What Is Next For The Stock Market?
The eventual stock market outcome, in large part, will come down to if the strategy of hiding in stocks such as those named above works for investors in these stocks or if these investors will throw in the towel. Investors should evaluate this on a daily basis using segmented money flows as one of the best clues at this time.
Trump says, “This is going to be a painful two weeks”. The stock market falls on Trump’s comments. However the same stock market previously went up when Dr. Fauci said 200,000 American deaths could happen. The stock market is complex – sentiment, positioning, technicals, short squeezes and other shenanigans tend to overrule the facts. Here is the key question for investors, ‘Will the ‘mother of support zones’ in the stock market hold?
It is important to note the top four holdings of QQQ are Apple (AAPL), Microsoft (MSFT), Amazon (AMZN) and Facebook (FB). The top four holdings of ETF SMH are Taiwan Semiconductor (TSM), Intel (INTC), NVIDIA (NVDA) and ASML Holding (ASML). The reason it is important to note the top holdings of these ETFs is because investors are hiding in them and similar stocks.
There is merit to hiding in the stocks names above because these companies have solid balance sheets and are likely to recover quickly.
What Is Next For The Stock Market?
The eventual stock market outcome, in large part, will come down to if the strategy of hiding in stocks such as those named above works for investors in these stocks or if these investors will throw in the towel. Investors should evaluate this on a daily basis using segmented money flows as one of the best clues at this time.
Trade active:
DON’T BE FOOLED BY THE BUYING IN THE STOCK MARKET DUE TO DUBIOUS OIL SURGE.
Crude Oil Surge And Jobs Report
At this time when coronavirus cases have topped one million, stock market investors are trying to figure out what is next for the market. The analysis of the stock market just became more complicated due to huge moves in crude oil. There is a strong correlation between crude oil and the stock market. If that was not enough, there are anomalies in the jobs report.
Under these circumstances, it is important for investors to figure out what really matters and what does not.
The jobs report showed March private non-farm payrolls fell 713K vs. a consensus of a fall of 250K. There are several anomalies here. Investor should consider ignoring this jobs report just like the prior initial jobless claims report.
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Dubious Surge
Crude oil surge is somewhat dubious because the demand for crude oil has fallen off the cliff due to coronavirus shut downs.
Momo Crowd And Smart Money In Stocks
The momo crowd was selling stocks earlier in the morning but started aggressively buying stocks later as crude oil continued to surge. So far this morning, smart money has been lightly selling on up spikes.
Crude Oil Surge And Jobs Report
At this time when coronavirus cases have topped one million, stock market investors are trying to figure out what is next for the market. The analysis of the stock market just became more complicated due to huge moves in crude oil. There is a strong correlation between crude oil and the stock market. If that was not enough, there are anomalies in the jobs report.
Under these circumstances, it is important for investors to figure out what really matters and what does not.
The jobs report showed March private non-farm payrolls fell 713K vs. a consensus of a fall of 250K. There are several anomalies here. Investor should consider ignoring this jobs report just like the prior initial jobless claims report.
-----------------------------------------------------------------------------
Dubious Surge
Crude oil surge is somewhat dubious because the demand for crude oil has fallen off the cliff due to coronavirus shut downs.
Momo Crowd And Smart Money In Stocks
The momo crowd was selling stocks earlier in the morning but started aggressively buying stocks later as crude oil continued to surge. So far this morning, smart money has been lightly selling on up spikes.