TSLA - Stocks Could Roll Over Good For Traders Not Investors. Prepare
2024-01-28 22:49:01 ET
Summary
- I advise traders to have cash on hand in their trading accounts to take advantage of potential market opportunities.
- The article suggests that a sell-off in tech stocks may occur in February, based on historical patterns and the current market conditions.
- I share my trading strategies, including building a position in Boeing and hedging against Tesla and Nasdaq 100.
Last week, I shared that when I talk about selling some shares to generate some cash, I don't mean selling your investments. Investments should be treated completely differently than trading accounts. I went to some lengths to explain that I am not advocating. Click the link above if you wish to catch up. Now going directly to the punchline, if you have cash in your trading account you now have room to maneuver. That might mean being hedged or it might mean looking for bargains, to sell into any recovery. I try to use known milestones in the economic calendar, and other known situations that allow me to anticipate what might happen. What if I am wrong? Well, my assumption is, is that if you trimmed a few shares here and there, hopefully you were taking profits. The biggest cause of angst and ultimately a lack of success in trading is knowing when to take profits. The answer is a tenet of our Cash Management Discipline, which is to take profits every day. Take small nibbles every day to take profits, and if you've given a trade 3 weeks and it's not working trim the losers a bit too. Pretty soon you'll have a decent slug of 20% to 30% cash going into a week like this one. What's so bad about this week? Well, February is starting… Also, on Wednesday the 31st is the FOMC meeting, and it could be the last important and consequential meeting of the Fed in a (hopefully) very long while. Let's put a pin in this line of discourse for a moment, and address the chart right below. If you are a long-time loyal reader you know that I believe that patterns repeat. That's what makes them a pattern in the first place. Anyhow, as you can see below, we often have several weeks of weakness starting in February. This is a five-year chart of the Nasdaq-100 ETF ( QQQ ) so these dips look miniscule but look at the percentages near the arrows. The first year on the chart was 2020 and the stock fell from 28%, in 2021 -9, in 2022 -22%, and 2023 -6%. Now I will grant you that in 2022 the market was already going down. With that agreement, most of the fall started in February. Had some been mindful that February often starts a bit of a correction they may have taken corrective action....
Stocks Could Roll Over, Good For Traders, Not Investors. Prepare