Trade Alert: And a playbook for into year-end

Remember a couple days ago when the DJIA bounced 500 points and I’d mentioned that if you’d been losing sleep when stocks had been crushed down in a straight line last week that you probably should lighten up?

Well, today the DJIA was down 500 points and the bounce is already gone.

I’ve outlined my expectation that the market could be rangebound with a downward bias into year-end as I’ve also outlined that I don’t expect the Bubble-Blowing Bull Market is completely over just yet. And I’ve also outlined how even if the Bubble-Blowing Bull Market is over that it doesn’t mean that stocks will crash like they did in 2002 and like they did again in 2008 when the previous two bubbles popped and stocks crashed. And even so,  you guys know that I’m always looking to be opportunistic and find Revolutionary companies when their stocks have been crushed and/or when there are huge opportunities of growth ahead regardless of the broader market/economic cycles.

And in my personal portfolio, I’ve raised a bunch of cash over the last few months and I had been adding index put options to help hedge on this downturn that I’d expected into year-end. Last week, as stocks got smashed in a panicky sell-off rout, I trimmed more than half of those puts.

So here’s the playbook for me for now, along with one opportunistic nibble on our newest addition to my portfolio.

I’m holding onto the rest of these puts for now but if the markets tank another 2-3% or get hit in another panicky sell-off, I’ll trim more of these puts and maybe even scale out of up to about 90% of the puts I’d bought originally. I’m not going to sell all of them and I might even roll into some lower strike prices if the markets rally again from these levels in the next week or two. Again, I’m just being a bit cautious as the markets have been in a ten-year Bubble-Blowing Bull Market mode and many middling stocks have valuations that remain sky high, and so on.

Meanwhile, if stocks do get crushed again in the near-term, say if the markets are down another 3-5% from here in the next few weeks, I’ll likely start nibbling some of the names I’d trimmed when stocks were at their all-time highs over the course of this year. I’ll send out a “Where I’d like to add more to each of our positions” post — including that I’d like to buy some more Twitter if it’ll get closer to $25 and so on.

Finally, I’m going to nibble a second small tranche of SNAP, making it a slightly bigger very small position in my portfolio. Here’s the write up from the Trade Alert on Snap last week in case you missed it.

Be cool, be careful, be prepared. Have a playbook.

PS. If you don’t own any gold and/or GLD, you might consider nibbling some of it sooner rather than later too.