Option Investor
Market Updates

Lowering stop in QQQ put

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Traders should now be lowering their stops in our QQQ put/short to the $47.50 level at a MINIMUM! A more aggressive approach would be to lower it to $0.50 above this current hours high beginning at 10:30 EST which was $46.28. Therefore a trader using the $0.50 approach would have their stop at $46.78. You can see how this $0.50 approach allows the trader to still participate an any downside short-term, but also helps eliminate risk from the trade.

NASDAQ-100 Index Tracking Stock (QQQ) 60-minute interval

My first observation here is that the QQQ's have NOT violated recent lows. On a short-term basis this is an observation of strength as it relates back to the March 1st low of $45.75. I want to stay with this trade as long as I can so I could continue to use my trailing stop technique and lower my stop to just above the first hour of trading high at $47.50. This may be too much upside for most traders. Those that feel this way could simply lower their stop to the opening hourly interval of $46.28 (see black box in above chart) and set their stop $0.50 higher at $46.78. If you're a trader that has hit his/her target then either take your profit here or use the above techniques to help you decide on a good stopping point you're comfortable with.

GSTI Software Index (GSO.X) Chart - 60-minute interval.

The GSO.X has broken below the 204 level. This is a level we creating using our retracement technique. Without it we would be lost and not be able to ascertain at what level we should be looking for strength in one of the weakest technology groups. If a weak group starts showing signs of strength, that would alert us that it is probably time to take profits in our QQQ put/short trade.

Intel (INTC) Chart - 60-minute interval.

Today's culprit is Intel (NASDAQ:INTC). I don't like shorting stocks immediately after "bad news" but aggressive traders could short the stock here with a stop just above the $36.66 level. I'm taking note that today's bad news wasn't enough to have this stock breaking below recent lows at $27.06. However, that doesn't mean the stock isn't going to get there. Current risk/reward for a bearish trade is roughly $1 risk for $2.63 reward. Not bad, but the bad news is out and everyone in the MARKET is on equal ground.

Jeff Bailey
Staff Analyst

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