The Fall of the S&P 500 is a Trading Opportunity in QQQ

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The recent correction of the S&P 500 presents itself as a buying opportunity, with no signs of a 2000 dotcom-like bubble and projections to reach 6,000 points by the end of 2024. In this context of volatility, especially in the wake of Nvidia's results and doubts about artificial intelligence, it is recommended to adopt tactical strategies to manage risk.

Currently, the Invesco QQQ Trust Series 1 (known as QQQ and also as the “little Nasdaq”) is in a trading range between 485.36 and 450.84 points, with support at 419.89 points and a recent all-time high of 503.52 points. The Pre-Market Checkpoint is at 453.55 points, and the RSI shows a corrective move since August 22, with a current value of 41.77%. These technical levels suggest key areas to execute and adjust positions in a volatile environment, taking advantage of the buying opportunity in the market.

An adaptable strategy for trading derivatives, such as futures or CFDs (Contracts for Difference), is the use of simultaneous long and short positions on the same index or underlying asset, similar to the “strangle” logic. Unlike with options, this strategy involves opening a long (buy) and a short (sell) position in the same asset to capture sharp market movements. In the case of expected volatility in the QQQ, a trader could hold both positions and adjust their size in each based on market movements, allowing them to take advantage of large fluctuations without relying on a specific market direction. This tactic effectively manages risk while maintaining exposure to significant movements in either direction.

Ion Jauregui - ActivTrades Analyst





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