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Thursday, October 6, 2022


Flip Floppin’ Friday – Futures Fly as Fear Fades

obama hugs nurseNothing came of yesterday's Ebola hearings

Here's a picture of President Obama hugging it out with one of the nurses that treated one of the Ebola patients – a strong image for the people as calmer voices begin to prevail – on that front at least.

Markets were also boosted by dovish talk from the usually hawkish Jimmy Bullard, of the St. Louis Fed, who said the Fed should consider delaying plans to end its bond-buying program at the end of this month to halt a decline in expected inflation.  This is what it sounds like when Doves cry at the Fed and, like Prince's mother, the markets are never satisfied but, for this morning at least – we're taking back those weak bounce levels that we told you we'd take back by Friday.  

“The recovery from the lows after Bullard spoke yesterday is another reminder how addicted markets still are to liquidity,” said Deutsche Bank strategist Jim Reid.  “The Fed can certainly help markets but perhaps we really need the ECB to step up a gear for a true recovery,” he added.

SPY DAILYStill, manipulated or not, this gives us two nice reversal days on strong volume and we couldn't be happier as we flipped very bullish in our Short-Term Portfolio and should be able to take full advantage of this rapid recovery.  

Whether or not we maintain that bullish stance into the weekend depends on how our bounce levels hold up today (see Tuesday morning's post for our amazingly accurate predictions of the week's action).  

Keep that in mind when I tell you there is nothing particularly bullish about hitting the weak bounce on the Friday of a drop week – it's merely better than the alternative of FAILING to make those weak bounce lines.  That would have been BAD!!!  Meanwhile, those of you who took our FREE Trade Idea from yesterday's morning post to go long the Russell at 1,050 (the same line we were watching on Tuesday) are now sitting on $4,000 PER CONTRACT gains and I do so hope you are not greedy and set your stops at the 1,090 line.  

We will be doing a LIVE Futures Trading Workshop at our Seminar in Las Vegas on Nov 9th and 10th – you can find out about joining us HERE (last 20 spots) – or, of course, you can become a Member and join us every day for all sorts of trading fun.  

Yesterday, in the morning post (which you can have delivered to you pre-market every morning by SUBSCRIBING HERE), I said:

As we caught a great bounce from 1,040 on /TF(Russell Futures) back to 1,070 (+$3,000 per contract) on yesterday's rally we've been going back to that well at 1,050 this morning but, so far, only picking up $200-400 as /TF bounces between 1,050 and 1,054.  Still, as long as that line holds – I like it for bounces  

As you can see from the /TF chart above, we continued to bounce along that 1,050 line until 9:35 when we finally took off and then right to 1,070, which held well enough and then on to 1,080, wich held into the close (+$3,000 per contract already) and then, for the extra-brave, a bonus $1,000 per contract this morning at 1,090.  We don't get trade opportunities like this every day but, when we do, we take them.  

For the Futures-challenged, in our $25,000 Portfolio, we had the TNA (ultra-long Russell) Oct $58/60.50 bull call spread at 0.85 from last week's Live Member Chat Room and we picked up 5 of those for our $25,000 Portfolio and 30 of them in our Short-Term Portfolio.  When the Russell dropped down to our target low, I called for an adjustment – RIGHT IN THE MORNING POST – to roll to a more aggressive Nov $56/63 bull cal spread at $3 on the $7 spread and, this morning, that spread should be $6 in the money (up 100% in 3 days).  THAT IS HOW YOU HEDGE! 

Volatile markets are FANTASTIC – you can make ridiculous amounts of money with options and you don't have to use the options to take on risk – your HEDGES can make you a fortune.  But only if you learn to BE THE HOUSE – Not the Gambler!  

Have a great weekend, 

– Phil



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No talk of secession right now:


Eventually CDC training will equip many hospitals to handle Ebola cases in ways that don’t actually spread the disease. But it would be helpful to see some after-the-fact reflection on why the resources of a central government are sometimes necessary to avoid catastrophe.

Phil / Anyone

Has anyone experienced "forced buy-ins" on their short positions on ThinkOrSwim the 1st trading day after the option was assigned and without being notified by the broker?

My short OCT SCO Calls were assigned on 10/16/2014 after market closed.  It was bought back by ThinkOrSwim without notifying me on 10/17/2014 during market hours.  I thought according to SEC rules, the settlement period for equities is 3 days.  In additional, the brokerage film will notify and ask the account holder to cover the short positions by a certain date before buying them back on his/her behalf.  At least that's what my experience was at Schwab.  Comments anyone?

Thanks, Brian

Phil, Thanks so much for that explanation. I see the complexity and the opportunity. So, start small…, and practice, practice, practice. Thanks again. Strether.

Thanks Phil!

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