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Monday, July 15, 2024

Monday Market Movement – Do We Ever Go Down?

breadth

We all go down for a piece of the moment
Watch another burn to the death to the core
And the roadshow thrills pack the freaks and the phonies
Sing: now is now, yeah! – Rob Zombie 

There is just no way to win betting against this market!  

Well, actually, there is one way and that's betting that each pop is nonsense and tends to have a subsequent pullback intra-day but, long-term, the cumulative effect of all that low-volume pumping has been a rousing success, to say the least.  

As you can see from Andy Thrasher's S&P chart, there has been some amazing underlying deterioration since the July 4th weekend with the Advance/Decline line falling back to trend and stocks above their 200-Day Moving Average dropping 15% in 3 weeks.  Stocks above the 200 DMA is a fantastic leading indicator for downside move – ignore it at your own risk. 

TNXPeople are panicking into bonds, dropping the 10-Year Yield 20%, from 3.1% to 2.45% this year but it doesn't matter because Central Banksters are pumping SO MUCH MONEY into the Global Markets that there's enough to buy all asset classes simultaneously – something that is unprecedented in Financial History – what could go wrong?

Well, one thing that could go wrong is you putting your money into Mutual Funds.  As it turns out, in an S&P study of actively managed Mutual Funds, only 2 (two) out of 2,862 actually beat the S&P over ANY of the fund's lifetimes (limited to 12 months or longer).  

That's even worse than the average performace of hedge funds, which only averaged a 0.59% annual loss when compared to just putting your money directly into the S&P.

 This dovetails with a conversation we were having this weekend in our Member Chat Room, where I identified 4 trade ideas for a $50,000 Portfolio that only used 1/4 of the buying power to generate $365,512 in projected profits over the next 15 years using CONSERVATIVE options strategies designed to MATCH the S&P, not beat it.  

Of course, those are nice, BORING, long-term investing strategies and they SHOULD be the core of your investing portfolio.  With shorter-term "fun" money, on the other hand, we use shorter-term leveraged trades like our "10 Trade Ideas that Could Make 500% in a Rising Market" that we went with in November, when we were still gung-ho bullish on the market.

It was a Members Only post at the time (sorry non-subscribers, but you can sign up HERE) and our trade ideas were:

  • ABX 2015 $13/18 bull call spread at $2.80, selling 2015 $15 puts for $2.05 for net .75, now $3.57 – up 376% (and up another 60% from our May 13th update)
  • 8 QQQ Jan 2014 $75/80 bull call spreads for $3 ($2,400), selling 1 ISRG 2015 $300 put for $23.50 ($2,350) for net $50, now net $3,240 – up 6,380% (and up another 24% since May)
  • HOV Jan 2015 $3/5 bull call spread at $1.25, selling $4 puts for .90 for net .35, now net $1.06 – up 202% (and up another 50% since May)
  • EWZ 2015 $44/49 bull call spread at $2.60, selling $35 puts for $1.95 for net .65, now net $2.95 – up 354% (and up another 44% since May)
  • CROX 2015 $12/17 bull call spread at $2, selling $12 puts for $1.90 for net .10, now net $2.25 – up 2,150% (and up another 7% since May)
  • 10 QQQ March $83/88 bull call spreads at $2.18 ($2,180), selling 1 AAPL 2015 $450 put (now 7 $64.29 puts) for $32.50 for a net $1,070 credit, now net $5,937 – up 554% (and up another 28% since May)
  • DDM April $105/115 bull call spread at $5, selling CAT 2016 $60 puts for $4 for net $1, now $7.47– up 647% (and up another 2% since May) 
  • 10 DBA 2016 $22/26 bull call spread at $1.20 ($1,200), selling 10 DBA 2016 $21 puts for .65 ($650) and 1 CAT 2016 $65 put for $515 for net $35, now net $2,500 – up 7,042% (and up another 35% since May) 
  • AAPL 2016 $450(now $64.29)/600(now $85.71) bull call spreads at $60, selling 2016 $400(now $57.14) puts for $35(now $5), now $18.90 – up 278% (and up another 114% since May)
  • T Jan 2015 $30/35 bull call spread at $2.50, selling $33 puts for $2.40 for net .10, now $3.75 –up 3,650% (and up another 9% since May)

So that's pretty easy, isn't it?  10 Trade Ideas that made an AVERAGE return of 2,163% on cash since Thanksgiving (call it 8 months) and 37% since May (2 months).  THAT is why we have been looking for cover plays lately – look what we have to protect!  At this point, those trades should now be cashed out as we have a new Buy Llist (Members Only, of course) and, as you can see, we've milked most of what we can out of them already.  

Don't worry, if you are too cheap to subscribe, we'll probably put out a report in 5 or 6 months of how our next 10 trades are doing (like our May update) and you still might be able to catch 30% picking up on our scraps.  

If we get a good week out of our indexes this week, with 25% of the S&P reporting their 2nd quarter earnings – we will certainly have 10 new trades lined up to take advantage of the continuing bull market so that, hopefully, we can make another 2,163% over the next 8 months.  You don't have to risk a big part of your portfolio when you are getting returns like that – just a little bit gives your overall performance a big boost.  

We're still skeptical and, in a large part, it's BECAUSE we did so ridiculously well on our 2014 picks already.  Money should not be this easy to make – the piper has to be paid eventually, and we've moved to mainly cash in an attempt to avoid getting caught up in a correction (if it ever comes).  

Our 4 new trade ideas from this morning's chat are a great way to get started but they aren't "going for it" trades – just sensible places to put some cash while we look at a few opportunites that are sure to come up after earnings.  

Where do you think we got those other 10 trades in November?  

 

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