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Monday, March 18, 2024

Fake, Flat, Final Thursday of Q2

Oh please!  

Do I really have to pretend it's some kind of coincidence that we have raced back to close the quarter just above where we started it in order not to be perceived as a conspiracy theorist?  It's not a theory when it happens all the time, is it?

And look at the volume, we gained 70 S&P points in two days on less than half the volume we had when we fell.  How does the market go up that much with so much less money coming in?  As I noted yesterday, it's a house of cards that can be easily toppled once today's window-dressing event is over.  Also, bulls should be very concerned that 2,076.50 is the 50-day moving average on the S&P and, if we can't get over that today – it's a technical failure anyway.  

This is not, by the way, sour grapes.  Though we believe the market is heading lower (still looking for 1,850 on the S&P over the summer), we are very much in neutral with our paired long and short-term portfolios.  On Tuesday we noted that our STP was up to $536,627 and our LTP was at $959,373 as of Mondays close at the lows (see post for strategy details).  70 S&P points later, our LTP has jumped to $1,004,321 and the STP as fallen to $510,062 and that's a combined $1,514,383 (up 152%) and that's UP $18,383 in two days (1.2%). 

So we made more money on the way down and we made more money on the way up.  Is it alchemy?  No, it's BALANCE!  We balance our portfolios into uncertain events and, although we have an overall neutral stance, because we are "Being the House – NOT the Gambler", we are still collecting those premiums – no matter which way the market goes.  I don't think you can have a better stress test of our system than we've had in the past few days!  

Learning how to Be the House and how to balance our portfolios allows us to make money in any kind of market conditions and, more importantly, it allows us to TAKE A VACATION.  I went to Florida last Thursday and came back on Tuesday and we didn't have to touch a single position despite the market dropping 5% in two days.  Don't you want to learn how to do that?  

Having a balanced portfolio in a crisis with plenty of CASH!!! on the side allows us to make fun little side bets like the bullish trades I posted on Monday morning for a long at $1.51 on Gasoline Futures (/RB) and $46.50 on Oil (/CL) where I said:

Our favorite long plays at the moment are Oil (/CLQ6), which is testing $46.50 this morning and Gasoline (/RBQ6), which is at the $1.51 line (very tight stops below on each!).  There's nothing happening in the UK or Europe that is going to stop people in the US from taking their July 4th trips, so we have a mismatch with price and probable demand.  That's how simple it is to decide to make a trade.  

The Futures trades are not portfolio trades – they are just fun things to do while we wait for our positions to mature which, if we're doing it right, is a pretty boring process.  Still, there's nothing boring about making $2,500 per contract on oil and /RB hit $1.54, which doesn't seem like much but the contracts pay $420 per penny so another $1,260 on those for the week.  

This morning we should get another chance to go long /RB at $1.51 (as we cross OVER the line, not under) and I like that for a pop to $1.55, which would be $1,680 per contract and, if you keep a $100 stop-loss below the $1.51 line, then your risk is $100 vs a potential 16x reward – that's how we play the Futures!

Meanwhile, we'll see if "THEY" can keep it up this morning but that 2,076.50 line on the S&P will be a tough sell and, on the Dow it's 17,758.25 and 4,831.50 on the Nasdaq, 10,391.25 on the NYSE and 1,137.70 on the Russell.  It is NOT a coincidence that all 5 of our major indexes stopped going up just under their 50-day moving averages.  That is the point at which low-volume manipulation tend to fail and now, without a real catalyst, we can expect to be rejected at those lines and then it's what levels stick that will matter.  

According to the fabulous 5% Rule™, The strong bounce lines that need to hold are S&P 2,050, Dow 17,400, Nasdaq 4,700, NYSE 10,250 and Russell 1,140.  Only the Russell has not hit the strong bounce line yet and we do need all 5 over for at least a full day before we're willing to buy into the hype – meanwhile, we'll be pressing our shorts into the weekend in our Live Member Chat Room.

Be careful out there!  

 

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