Futures NQ to push stock further South?
NQ 1 hour futures set up for a further decline. Interested to see what the night will bring for momentum. Overall, the EMA and MACD are in tandem with a slight short term downward trend.
By the numbers:
1) MACD cross over down several trading bars/candles ago. Notice to the left the MACD has also dipped below the even/zero line indicating negativity brewing in the momentum.
2) Notice when the MACD crossed over to the down side, the momentum went reasonable flat and 10 bars after the cross over, the EMAs crossed negative
3) Once the EMAs cross down and the both the EMA and MACD were trading to the downside, so did the price. This would have been an objective Short entry with approx. o.45% to the down side. Roughly a half percent doesn't seem like much but in the options world with an ETF like QQQ sitting at $223.87, a half percent move is roughly roughly a $1.00 move. A dollar move in options in the span of a day or two in some cases is pretty significant gains.
Example:
QQQ Put Option at $2.83 strike price w/ expiration Feb 5
Delta = 0.54
Theta = 0.08
Diff = 0.46
Barring other smaller factors that may come into play, this is roughly about $40 per option purchased at $283 each.
Profit = 14% in relatively short order
I do expect further downside for NQ but this is an example where you take profits to reduce risk.
More aggressive traders can wait until one of the indicators reverse and the two indicators are not in synch with one another.
By the numbers:
1) MACD cross over down several trading bars/candles ago. Notice to the left the MACD has also dipped below the even/zero line indicating negativity brewing in the momentum.
2) Notice when the MACD crossed over to the down side, the momentum went reasonable flat and 10 bars after the cross over, the EMAs crossed negative
3) Once the EMAs cross down and the both the EMA and MACD were trading to the downside, so did the price. This would have been an objective Short entry with approx. o.45% to the down side. Roughly a half percent doesn't seem like much but in the options world with an ETF like QQQ sitting at $223.87, a half percent move is roughly roughly a $1.00 move. A dollar move in options in the span of a day or two in some cases is pretty significant gains.
Example:
QQQ Put Option at $2.83 strike price w/ expiration Feb 5
Delta = 0.54
Theta = 0.08
Diff = 0.46
Barring other smaller factors that may come into play, this is roughly about $40 per option purchased at $283 each.
Profit = 14% in relatively short order
I do expect further downside for NQ but this is an example where you take profits to reduce risk.
More aggressive traders can wait until one of the indicators reverse and the two indicators are not in synch with one another.
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