Market Update and QQQQ Hedge

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Market Update and QQQQ Hedge

The Dow Jones Industrial Average (DJIA – 12,480.7) added 0.05 percent on the day, edging into positive territory.The S&P 500 Index (SPX – 1,418.34) tacked on 0.12 percent, but was capped by its 10-day moving average. Finally, the Nasdaq Composite (COMP – 2,453.4) saw the largest percentage gain on the day, logging an increase of 1.25 percent.

In terms of news today orders for U.S.-made factory goods increased by 0.9 percent during November. The strongest demand was for computers, transportation equipment, and defense goods. Excluding transportation, orders for U.S. goods dropped by 0.5 percent for the month, which suggests an overall weakening of the manufacturing sector.


The Markets are making me slightly nervous at the moment I feel something is in the offing.There does seem to be a bit of a struggle going on with the last couple of days swinging to and fro.It is always difficult at this time of year to ascertain whether we are seeing the results of thin markets and people window dressing, but I bought some QQQQ Feb 43 Puts today to give some downside protection to my Portfolio.

They will not be enough to completely hedge my positions but will cushion the blow a bit if we lurch downwards over the next month.


Increasingly I am using Options as a Hedge in my Portfolio to protect the downside.I am firm in my beliefs for the mid Term and the Macro Economic picture supports this, however we cannot force the market and we have to be patient, using options to hedge your portfolio and allow you to stay in the game longer to give your strategies time to unfold is good sense.It is extremely difficult (if not impossible) to pick Market tops and bottoms-but learning to use options as a hedge is a great way to allow you to ride out the daily and intra day noise that can be emotionally difficult to trade through when you are investing for the longer term.


I will post some insight into hedging tomorrow for those of you who are interested in a bit more detail-meanwhile if anyone has any questions on this or any other topic then please feel free to ask.


Best Wishes


RT

 

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