Stocks futures are pointing to a lower open this morning with S&P futures down 5 points, NASDAQ futures are lower by 32 and Dow futures are down 42. Fair value on the S&P 500 for today is $1.92. Programs are set for buying at $3.08 and set for selling at $0.56.
NASDAQ-100 bullish percent at 63%
Yesterday's 4.4% decline in the NASDAQ-100 now has the bullish percent back below 70% and in bear confirmed status. On May 23rd at 09:00 EST, PremierMarkets.com alerted traders that this indicator was once again in "overbought" territory and that had us tinkering with the idea of profiling a covered call on a bullish position we had profiled in shares of Qualcom (NASDAQ:QCOM).
NASDAQ-100 Bullish % Chart - 2% scale
Understanding how the bullish percent works is easy once the trader knows how a stock creates a "buy signal" and a "sell signal" on its point and figure chart. If we look at a chart of Qualcomm (NASDAQ:QCOM), understand trend and where support/resistance lies for that stock, traders can begin to perhaps make a more educated decision on why we were thinking a covered June $65 covered call was appropriate for traders that may have purchased QCOM stock per our profile on May 16th at $63. Then, those traders that like to trade the QQQs will have a much better feel for trading the QQQs than they ever imagined possible.
Qualcomm Chart - $1 box
There were not a lot of indicators saying that a trader should be "hedging" a long position in shares of QCOM on May 23rd when the stock was trading at $71. We did do a lot of technical analysis on a bar chart and weighed that evidence with the bullish percent being overbought in the NASDAQ-100 to make our decision that profiling a covered call for QCOM made sense. As of yesterday's close, that looks to have been a good decision and traders should be commended. Now what? Where would one look for QCOM to find support? I'd say that big blow off move from $63 and that old triple top buy signal where we profiled the stock bullish would be one area that a trader looks for QCOM to firm up. That also begins to look like a level where QCOM might try and test its bullish support line (blue +). How much downside is left in the QQQs? That's tough to say as there are 99 other stocks that make up the NASDAQ-100 and QQQs, but a trader should understand where QCOM is trading as it relates to that stocks supply/demand chart along with Microsoft (NASDAQ:MSFT), Intel (NASDAQ:INTC) and others. Once you get started with point and figure charts, you'll wonder how you ever attempted to trade without them.
I've chatted with more than a few subscribers that have gotten some expensive educations in the markets over the past year. I'd like to invite all subscribers wanting to learn more about point and figure charting to attend a web-based seminar I'll be teaching on June 12th titled "Starting with Point & Figure Charts." Once you get a grasp of the basics, I'll then be teaching more advanced concepts of how institutions assess market and sector risk on June 26th in the "Point & Figure Charting: Assessing Risk" seminar. You can find out more about both of these seminars and many others by jumping over to www.premierinvestorseminar.com/seminarcalendar