MCsweet, thank you for the warning on shorting those volatile high-fliers.
Although I was lucky to have covered short positions in RIMM and SOHU (see my 5/19 update) for a profit, the powerful bounces after that made me really nervous, I could have been caught and end up with big losses. I will stay away from shorting such "volatile high-fliers". QQQ is a tracking stock of NASDAQ 100, the 100 largest tech stocks with trillion dollars combined market cap. It is much less subject to "short squeeze" and manipulation. IWM (Russell 2000) is another choice but less liquid and hard to borrow shares to short, and SPY (S&P 500) is less correlated with my "tech focus".
Since my "Potential Bounce" email/update on 5/19, the NASDAQ went up around 5%, DJIA and SP500 had similar bounces. The big downtrend confirmed (by my model) on 4/23/2004 is still intact. We are approaching another leg of the sell-off, this time likely faster than the 10% NASDAQ drop during 4/23-5/13 and end with "Panic Selling".
I have entered several hundred contacts of QQQ June 38 puts at $1.5-1.7 on Friday 6/4/2004, and shorted QQQ around $36.35-36.6. I will buy more when the model gives the "Confirmation signal", probably next week. As always I will email "the signal" to my mailing list first, and post it here several days later.
Good Luck to all. |
