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Trade of the Day: PowerShares QQQ ETF (QQQ)

Historically, the month of November is bullish for the stock market, and there could be a continued rally into this month and the rest of the year.

To start, the Dow typically gains nearly 3% in the first five days ahead of the mid-term elections and in the three sessions following, according to the history books. On Oct. 28, the index closed at 17,005. Friday’s close checked-in at 17,573, which represents a gain of 568 points, or 3%, over the eight-session trading period.

The slick-talking pros and suit-and-ties have and are shunning the historical stock market talk, but they do so because they were the ones calling for a market top back in October. They also didn’t prepare for the breakout to fresh all-time highs and are once again behind the eight-ball.

As far as the month of November, it usually represents the start of the “best six months” as the stock market tends to do best from November to April, and there will likely be talk of this in the coming weeks given the nice start to the month. However, what you won’t hear is that it is also the start of the Nasdaq’s “best eight months,” which is why I was able to cash out to two recent trades PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ).

My Momentum Options members grabbed two back-to-back gains of  118% in the QQQ November 102 calls and 66% in the QQQ November 100 calls in recent weeks.  Those trades are closed and I don’t suggest buying the November series this close to expiration, but I do have a new recommendation today to take advantage of the stock market’s positive trajectory and the bullish signals for the NASDAQ and the QQQs.

Buy the weekly QQQ December 5th expiration $103 calls (QQQ141205C00103000) at current levels. They closed at $0.70 on Friday. I’m using a weekly option because the regular monthly options are showing non-standard strike prices.

My exit target for the calls is $1.70. At this time, I don’t have a stop loss in place for the trade.

Resistance at $102 for QQQ held throughout the week, and a close above this level would be bullish for a run to $104-$105. Short-term support is at $100 followed by the 50-day moving average.

stock market QQQ

I do believe the Nasdaq makes a run at 5,000 into year-end or early 2015.  Tech hasn’t come this far not to at least test its all-time closing high of 5,048.  This level was achieved in March 2000 with the bulls pushing an intraday peak of 5,132.

Once Wall Street recognizes the Nasdaq is headed for a test to its all-time highs, there could be some chasing.  All that money on the sidelines will be itching to go to work as fund managers who have underperformed the market start to panic.

I don’t think we’ll see another major dip of 5%-10% downside this year for the market.  Of course, the technical picture could change overnight with war or politics as they about the only two things that might derail the bulls.  With earnings season winding down and the holidays on tap, this is usually a fun time to trade.  However, I do believe a mini-trading range could form over the next week or two before another breakout occurs, so be a bit patient – this is also part of the reason I don’t have a stop loss in place for this QQQ trade.

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Article printed from InvestorPlace Media, https://investorplace.com/2014/11/trade-of-the-day-powershares-qqq-etf-stockmarket/.

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