ALERT!!
The NASDAQ is very overbought. QQQ RSI(14) = 76. There WILL be a correction. Protect your positions with STOPS. One suggestion is this. If you have huge gains already, take 10 to 15 percent off the table and keep in CASH or something liquid.
The contrarian play is to short the NASDAQ. SQQQ now $22.00 March of this year it was $161.35. You will make bank over a 3 day period until the NASDAQ bottoms.
Use a trailing stop, but at least a spread of 10 percent. You are giving away a possible 10 percent for the safety of not having 15, 20 or 25 percent wiped out. A 20 percent drop in the NASDAQ would be 11,969 – 20% = 9,575
We were at 9,575 June 7th, a short 80 days ago.
Why is the NASDAQ overbought?
#1. Interest rates are at all time lows. Investors seek yield. Both real estate and the stock market are yielding great returns right now.
#2. The NASDAQ is technology heavy. That is, less brick and mortar and more “work and shop from home” solutions.
#3. Trend is your friend, until it tells you otherwise.
#4. The above 3 market conditions point to a higher NASDAQ except for one thing. Prices have become very frothy, very overbought, greed, herd mentality, momentum. All things which are part of the human psyche yet not based on company fundamentals ( see the explosive gains in APPL and TSLA after news of forward splits).
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