Monday, April 27, 2015

Apr 27 - False breakout?

I went from being super bullish to being nervous about my QQQ long on the exaggerated gap up to fairly bearish.  Today marked a red candle that opened above the upper BB.  In the last 7 times this has happened, 5 times it has led to short term downturns, 1 time it stayed flat, and 1 time it continued moving up.   I went short QQQ with a starting position at close.  The breadth in the indexes is pretty weak and IWM took a massive hit today along with biotechs.  VIX not unsurprisingly bounced once again off the downward trendline and is about to issue another buy signal.

The table from Rob Hanna's Quantitative Edges and corresponding article,

This divergence definitely spooked me and caused me to pull off half of my QQQ long EOD Friday along with the unconvincing action in the other indexes.

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Jan 20 - Equities caution signal, short SPY, NFLX

Call buying has come back and very good chance of a pullback here