Wednesday 01-12-05
QQQQ
Back to our example from Monday and a bearish trade on the QQQQ. At the moment we should see an attempted bounce on the QQQQ, as the stock is bouncing off the $38.00 support just as the MACD's and Stochastics are beginning to move higher. Support is at $39.50 and then $40.00.
The stock has now shown 2 lower highs followed by 2 lower lows and will
continue this trend down until it breaks through the $40.00 resistance. So how
do we trade this? How about with:
A Bear Call Spread February $40/$42
Put
Option - March $40 puts
A Short Sell?
All three of which should only be
entered into after the stock fails to break either the $39.50 or the $40.00
support and then reverses down again.
Cheers,
Mike