The QID stock hedge is proving to be a favorite again, as the markets reverse a 4 day rally on a hot CPI print. SPX spent only two days above the 50d moving average.
In January the S&P500 began to make lower lows. By February it was obvious that the descending 50d moving average was resistance. Then came the rally in March where we started reducing equity exposure and actively using hedges in QID stock, SPXU stock and RWM stock. The August pivot high ended at the bearish 200d moving average, a stark reminder that we are still in a bear market with all major US indices below this key long-term moving average.
When the stock market indices put in a bottom in June, we told members we would look for some long setups after the 9/21 exponential moving averages crossed upward. This bullish signal kept us long until the third week of August, when price action was rejected at the 200d moving average. This was a bearish signal, telling us to go long QID stock again.
We and the members in the trading room keep our swing trading nimble, trading mostly scalps and short -term, one or two day swings, with the 9/21/50/200-day moving averages acting as definitive resistance for changing our short-term strategies. We refer the ProShares Ultrashort QQQ ETF (QID) whenever the performance of the Nasdaq 100 is in questions, while profiting should the market go down. This QID Stock hedge also helps to neutralize our delta.
At this point, the recent CPI print tells us to remain cautious. We think its better to wait for new swing trading opportunities than to try and aggressively make money in a stock market that can’t hold a trend for more than a few weeks.