The first objective on the newly announced ‘Project Stimulus’, is protect the position.
As yesterday’s announcement stated, we’re taking the stimulus payment and trading a separate account.
The trading techniques to be used are presented on this site.
The magenta bar shows the entry at LABD 18.835 (not advice, not a recommendation) opened during the Fed speech this past Wednesday.
The reason for the entry at that time was two-fold.
Biotech IBB was already at 50% retrace and had rejected that level once.
Monthly and weekly momentum MACD, indicators were (and are) pointing down; giving extra weight to a potential reversal.
Empirical data (i.e. experience) gathered over a thirty year period had shown, whatever direction the market took during a Fed speech, was quickly reversed in the coming days:
I’ve labeled such events as “Fed-Fake”.
At this point, the position is well in the green, closing at $1,552, yesterday. We’ll be putting in a hard stop at 18.96, shown above.
If we’re in a sustained reversal, it’s not unreasonable to expect price action to get back to previous near-term highs (lows for IBB).
Using highly leveraged LABD (not advice, not a recommendation) that would equate to about a 50% gain.