Tuesday, November 13, 2007

Short QQQQ/ Long SPY Trade Idea Result

Last Thursday under "just a thought", I casually pondered a Short NASDAQ 100 (QQQQ) and Long S&P 500 (SPY) trade based on their unusual divergence/ spread. I thought I would report on that trade idea result today.

Excluding costs, if the trade had been put on Thursday morning and taken off this morning with equal dollar weightings, the Long SPY side would have been down -1.7% while the Short QQQQ side would have been up +7.6% for a net gain of about +5.9%. As it turns out, there was plenty of opportunity to put the trade on Thursday after posting.

Looks like we are finally getting that statistically indicated (bear?) bounce. I imagine it will stick for all the reasons posted yesterday before the closing "throw away", plus the emphasis on some positive news for change. Keep an eye out on those declining 5-day moving averages as potential resistance though.

NASDAQ 100 Down 2 Days > 6%: What Happens Next?

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