QQQ and the 200-Day Moving Average

QQQ testing the 200-day moving average today

The selling won’t stop today and now you have QQQ testing the 200-day moving average and even breaking below it – something that hasn’t been seen since January of 2023. During that time it was different; major stock market bottom had been formed and we were finally coming off a year long sell-off.

Now it is the exact opposite with QQQ testing the 200-day moving average following a significant two-plus year rally that saw stock valuations reach historic levels never seen before.

With the break of the 200-day moving average it creates a real conundrum for the bulls; sell now while you still have incredible profits and risk this being simply another ‘buy-the-dip’ opportunity, or white knuckle those positions and potentially risk seeing a massive sell-off that eats away at all of your hard-earned profits from over the past two years.

But here’s the thing, the only way you find yourself in this conundrum is if you haven’t been taking profits along the way, raising cash, and making sure that in the event there was a major market pullback, or worse, you wouldn’t be putting all those gains at risk.

And don’t pretend that you can figure out what the right decision here is, because no one really knows, that is why you have to manage the risk along the way, so that if the worst does truly happen, you can welcome it with open arms because you’ve been playing your cards in such a way that manages the risk.

This wasn’t a lesson that came easy for me either, I had to learn when I saw the Dot-com bubble blow up my account in the late 90’s/early 2000’s. But it was a lesson that has stuck with me ever since. Right now, we don’t know if this sell-off is nearing an end, or whether it is 2008 all over again, or something in between, like what was seen in 2022. The charts have yet to reveal that to us, and we can’t presume what that will be before it happens.

Until then, keep trading with ‘manage-risk’ mindset in every trade and investment you take.