Time to Trade TSLA Again, Plus SPY & QQQ
Gaps like to be filled but will markets keep climbing? A look at RSI for SPY & QQQ.
I hope you and your portfolio are enjoying this hot start to 2024. The upside has been tremendous!
I remain bullish and firmly believe that fighting the trend is a losing battle.
That said, I am paying attention to the charts and in particular the relative strength index (RSI) for SPY after the recent move higher.
We saw this same RSI divergence in July 2023 just before three months of selling.
While relative strength was high throughout the summer of 2023, you can see a slightly lower RSI at this peak from the prior RSI and market highs.
Price moving higher while RSI makes lower highs can be a signal of a reversal, so it is worth noting.
And we are seeing the same thing for QQQ.
As mentioned, I am not one to fight the trend.
In fact, I write about exactly that in today’s post for the WOLF Financial Newsletter.
So until the trend breaks, I will continue to look for trading opportunities to the upside.
It is wise to take profits more quickly at these levels. And if you want to stay in the trade, leave a few runners.
I like to take 60% of my position off after the first big move higher, move my stop loss up to my initial entry or slightly below, and leave a few runners to scale out of if shares continue to climb.
The same is true for any short positions I take, just in the opposite direction.
This all leads nicely to this week’s first trade idea.
We are talking TSLA, bouncing off of anchored volume weighted average price (AVWAP) and making a move to fill the gap!
There are a couple of ways to trade it, so let’s get right to the details!
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