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Trade Alert: Selling more puts into the panic

October 11, 2018 by Cody Willard Leave a Comment

Just a handful of weeks ago, which now seems like a lifetime ago, do you remember all the daytraders and momentum lovers all highfiving and joking about all the money they were making?

I wrote about it thusly:

Highflying stocks: Nemesis for the hubristic coming sooner rather than later

August 24, 2018 by Cody Willard 

I have a few thoughts about the markets and hubris and trying to keep perspective about the next 10,000 days of our lives, as we head into the weekend.

I see multiple stocks up 20-30% every day these days, even giant multi-billion companies like SPLK and other already-overly-loved tech stocks like AMD and NFLX going up close to 10% on upgrades from analysts who have missed the entire bull market.

While that might be a great market for daytrading and momentum swing trading, that’s always fleeting. Sentiment and momentum can swing in a heartbeat and all those people highfiving because they made big gains this week are likely going to be in pain when the turn, even a temporary downturn hits. And I tend to think we’re about to get that 5-7% downturn I’ve been expecting, starting likely next week as hubris and highfiving go hand and hand. And the markets hate hubris.

And this comment from a long-time subscriber this afternoon in the Trading With Cody chat room, as the trading week comes to a close underscores the feeling that many of us, including me, have from not having owned EVERY stock that’s gone up a ton this week, even as the fact is that we do own and are up nearly 800% on this stock since we bought less than three years ago.

Subscriber: “New high today for NVDA. In your July 17 Latest Positions you mention that NVDA ‘is still quite overvalued and overloved.’ The stock is up almost $20 since July 17. What are your thoughts on NVDA in light of these comments?”

—-

Cody back in real-time today October 11, 2018.

We are now getting pretty much to the flipside of that market where instead of seeing multiple stocks go up 20-30% per day, we’re obviously seeing hundreds of stocks go down 20-30% in two days’ time.

So anyway, not much to do right here since we’ve been prepared for this downturn except to trim a few more of our puts. I’m selling another 1/3 of my remaining QQQ and SPY puts now with stock markets down another 2% today across the board.

I’m likely to do some buying/nibbling on some favorite names next, maybe later today or tomorrow if there’s even more panicky action.

Related posts:

Trade Alert: Economic analysis, stock market set-up, shorting IBB
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Trade Alert - Selling most of my fuel-cell bubble puts for huge profits
Energy crash's impact on the economy, Fully updated SSYS analysis PLUS Trade Alert: Trimming more AM...
Trade Alert: Bullish On Wolf, Rivian and Tesla; Bearish on Fisker and Lucid and GM etc
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Filed Under: Trade Alert

Disclosure: At the time of publication, the firm in which Willard is a partner and/or Mr. Willard had positions in some of the stocks mentioned above although positions can change at any time and without notice.

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This does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or cryptocurrency or token any other product or service by Cody Willard or any other third party. Furthermore, nothing in this is intended to provide tax, legal, or investment advice and nothing in this should be construed as a recommendation to buy, sell, or hold any investment or security or cryptocurrency or token or to engage in any investment strategy or transaction. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your business advisor, attorney, or tax and accounting advisor regarding your specific business, legal or tax situation.

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