Bulls boosted the major stock indexes above short-term resistance levels on Friday, and the rest of the session was all about bears cleaning up the fallout, states Jon Markman, editor of Strategic Advantage.
The Nasdaq 100 raced to 12,291, a gain of 2.0%. The rally erased most of the decline recorded over the prior week. And it seems likely that gains will continue next week. Bullish momentum is building. Buyers are ignoring bad news. The Tesla (TSLA) investor day representation on Thursday was underwhelming yet shares finished 3.6% higher.
The S&P 500 Consumer Discretionary (XLY) sector on Friday gained 2.1%, second only to the S&P 500 Technology (XLK) sector, which added 2.14%. The tech-heavy NDX rallied Friday beyond what should have been key resistance at 12,142. That level now becomes important support. The next important respite for bears is 12,510, the small downtrend line from the February highs. Bears should concede a rally to this level where they will attempt to regroup. Look for bulls to buy any weakness in the early part of next week.
The QQQ Loop: Members bought the WisdomTree Floating Rate Treasury ETF (USFR) on Feb. 24 at $50.27. The position is a cash alternative and closed Friday at $50.32.
Now sell enough to make the following trade:
- Place an order to buy ProShares Ultra QQQ (QLD) at $42.75 lmt gtc.
- If filled, set up to sell half of the position at $47.90 lmt gtc, and a half at $58.20 lmt gtc.
- If filled, place a stop loss order at $39.50 stp gtc.
If this trade works, the potential upside targets are +12.1% and +36.2%. The potential downside risk is -7.6%.