Fundamental Trading Diary

Fundamental analysis of the capital markets

Biding my Time

It seems that my choice of contract was once again wrong.  Betting on a market turn-around, I went short NQ for the beginning of the week.  It’s up 0.6% — at the same time that the Dow has lost -1.76%.  My rationale was selling the more dangerous Nasdaq stocks instead of the stronger Dow companies.

Despite the fact that I seemed to have picked the wrong contract in the short term, I’m pretty confident that this means that the Nasdaq has that much farther to fall.  That said, let’s examine what the markets have done when down days on the Nasdaq — the most volatile domestic index — move less broadly than its Dow 30 and S&P 500 counterparts.

The fundamental reasons for a lower stock market are still very much valid, and we have to wait patiently and in an underleveraged fashion for the rest of the market to realise this.

I’ve picked up three more NQ contracts at 1965.75 – this is a short term trade which I’ll likely close out at the end of the day.


August 14, 2008 - Posted by | Uncategorized

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