Let’s take a peek at the updated chart of $QQQ that I first posted last night.
The 57 area that I identified on the chart probably holds some significance, no? I like round numbers. In honor of keeping things simple, I use these round numbers as a basis for locating support or resistance.
Sure, I could drill down further, but what is the point. I see 57 on that chart has served as a confluence zone since mid January…look, it’s basically right in the middle of the range.
What does this mean for my trade? Well, I want to see buyers jump in to try and keep the price above 57. We came perilously close to breaking through 57 to the downside today, but prices stabilized just north of there and never really retreated to that point for the remainder of the session.
Great…now I have my line in the sand.
If not for the gap and fade behavior today, (thus producing that rather ominous looking candle) I really would have been emboldened to take additional long positions. As it stands, I wanted to see how things would play out.
I am happy with the results. Buyers were able to save face and bring most of the indices close to flat for the day. I’m encouraged by this development, as I think these kinds of things matter. The last hour of trading has not been kind to stocks recently, so the change of pace was refreshing.
I still am convinced that we have some sort of strong rally soon and am positioned accordingly. My risk sits at 3% (with a 1% realized loss in the books). Recall that I’m willing to push to 7%…but that sell-off this morning was something to behold.
Moments like that are why I think paper trading is a joke…you can’t simulate a situation where you are losing real money really fast that was just in your account a second ago.
Anyway, I’m a bit leery to pull the trigger on more buys. I feel like you have to have a combination of conviction and testicular fortitude to be in the position to hit a home run. I have the conviction…I just need the balls. Stay tuned to see if/when I find them.