You know things are fun when the SPY and the QQQ are trading like penny stocks.
I mean, ouch, look at this chart:
These past few days have been uneasy on accounts of many – I sure hope you aren’t one of them.
But as always, the biggest question is – do you buy the market’s dip?
Let me share some thoughts and ways I would trade this.
The Cursed $470
If you look at the bigger picture, the market remains very strong – we’re by all means in an uptrend and historic highs.
However, I can help but notice how much the SPY’s been struggling with this $470 area:
And to be perfectly honest, it begins to worry me – this is the first time in a while when the SPY repeatedly fails to make it through to new highs.
This week’s failure and yet another major rejection of the $470 may be signaling a bigger issue here.
I believe the area will be key to what happens next. There are 2 scenarios:
- The flush stops, SPY slowly but steadily establishes above $470, and moves on higher.
- SPY can’t hold up and continues lower, possibly going for a major pullback into the $430 area.
I’m not ready to bet on either just yet, I think the next few days will give more clarity, but one thing is for certain – until SPY clears the $470, I’d be very careful with any long bets.
What to Trade
If you happen to think that SPY is too boring for active traders, there are other ways to trade the market.
For example, here’s Jason Bond getting into some UVXY Puts earlier today:
Volatility products – UVXY and VXX being the main ones – are a great way to bet on or against the market, as they tend to move quite aggressively when the market snaps.
Just remember that when your reward increases, your risks go up as well.
Last, but not least, there are Jason Bond’s absolute favorites: the QQQ and the triple-leveraged brother – TQQQ:
Not looking very boring, is it?