Yesterday was wild!
“The Math Reveals the Target” is what the video says and that’s exactly what we did on Tuesday, when we were preparing for this leg of the drop. Above is the zoomed in 5% Rule™ for the Nasdaq – following the 10% drop from our predicted Top of Range at 30,000 to the 10% correction (so far) at 27,000. We “only” expect the bottom to be about 26,500 for this sell-off but 27,000 is the Strong Bounce line on the 20% correction – so of course it’s going to offer SOME support on the way down.
Once we get the support we expect we have to step back and OBSERVE the action and that’s what the Zoom Chart is for – to tell us whether the bounce we get is Weak or Strong and anything less than breaking over the strong bounce and holding it (without breaking!) for TWO FULL SESSIONS does not count.
As it took us 3 days to fall from the Strong Bounce Line – we can give the Nasdaq 3 sessions to take it back but, if not – then MORE HEDGES! We were already hedged for a 20% drop (just in case) so this is nothing and, in fact, looking at our Money Talk Portfolio, which hasn’t been touched since June 9th (we only adjust it live on Bloomberg) the untouched positions went from $561,468 (up 461.5%) to $648,625 (up 548.6%) in less than two months and that’s up $87,157 (15.5%) while the Nasdaq fell 10% – NICE!
How do we do it? Well, for one thing – WE DON’T CHASE CRAP!!! Also we hedge, that SQQQ spread is net $54,150 – up $17,150 from where we initiated it – FREE FOR THE PUBLIC – in our June 9th Review. It is, in fact a $180,000 spread so it’s STILL providing us with $125,850 (20% of our portfolio) in downside protection if SQQQ hits $60 – which is only a 7% Nasdaq drop away from here (25,300).
So math, Math, MATH!!! If you KNOW your portfolio math then your portfolio won’t surprised you and you can “SEE THE FUTURE” because you KNOW for a MATHEMATICAL FACT what your portfolio will look like if the market is up or down 5%, 10%, etc…
There’s NO Big Tech in this portfolio. Not that there never was – it’s been running since Aug 21st of 2024 (our 5th MTP on Bloomberg!) but there isn’t now because Tech was overbought and there were 15 VALUE stocks we liked better to ride out the correction we saw coming a mile away (I’m only on the show once per quarter – so we have to plan ahead).
Smart Portfolio Management is not always about making money – it’s also about protecting your gains. Between March and June, the Money Talk Portfolio made 49% ($185,026) and our primary goal on June 9th was to LOCK IT IN!!! – not to try to make more. As value investors, we are sharply aware of when we’ve made TOO MUCH money in a period – that’s how we KNEW that the market was overbought.
We didn’t try to double our gains – WE PROTECTED THEM!
For our other Member Portfolios, we protect our gains in the Short-Term Portfolio (STP), which we last updated on July 16th and we’ll review that for our Members in today’s Live Member Chat Room (you can join us here) and we’ll see if there are any gains to harvest and of course there are as our SQQQ hedge in that portfolio finished yesterday like this:
That’s up $451,995 and we started with a $119,950 CREDIT and it’s right on track because MATH told us on July 16th that we had $779,913 of downside protection and a 10% drop in the Nasdaq should have brought us about halfway there. Not magic, not luck, SCIENCE!!!
Trading is not supposed to be a guessing game. That’s why our Live Member Chat Room and Live Trading Webinar (yesterday, 1pm) was so calm yesterday, during a 1,000-point drop in the Dow – we are in control of our own trading destiny by sticking to VALUE stocks and using options for hedging and leverage – NOT to gamble!
We have a whole YouTube Channel full of great videos like these – SUBSCRIBE HERE – FREE!
We WILL teach you to be a better trader – we’ve been doing it for 20 years for tens of thousands of investors – we can help you too!
And, over 20 years of teaching trading and investing techniques – the hardest thing I have to teach investors is PATIENCE. And today, the lesson is “Watch and Wait” – while it’s tempting to “buy the dip” – especially with all those fat gains from our hedges – we’re not really seeing the evidence that the market SHOULD be going back towards the highs – are we?
We could be wrong, we could be right – that’s why this is a very important juncture to step back and let the MATH tell us whether this is a real recovery – or just a bounce on the way down…
