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Trade Alert: Taking profits on some index puts

December 7, 2018 by Cody Willard 1 Comment

It’s sure gotten a bit panicky out there today as the Russell 2000 small cap index makes new lows today. The Nasdaq, S&P 500 and the DJIA are all just about 1-3% away from their intraday lows in October. There are probably a lot of algorithms and traders out there waiting to sell and/or short stocks if the major indices breach those lows, so expect at least one more whoosh down if they do.

Meanwhile, the battles being waged in The Great Trade War of the 21st Century are heating up and just as I’d noted Wednesday night when the news hit, we can not downplay the significance of the arrest of the “CFO” of China’s big tech company, Huawei. Do you not think that executives at Cisco or Intel are wondering if they just might be putting their own freedom at risk the next time they go on a business trip to China? Huawei is China’s Cisco/Samsung/Nokia rolled into one giant tech company controlled by the Communist Party. And we just had Canada arrest their CFO while she was changing planes in Canada.

On the other hand, here’s a bullish anecdote at least. I just got a text from one of the many permabears who have missed the entire Bubble Blowing Bull Market, whom I hadn’t heard from in years.

Feet to fire prediction — the markets bounce 2-3% here from this afternoon’s panicky levels. And then maybe they do finally go below the recent lows and bring out one big panicky capitulation whoosh down that actually serves as a bottomish level for the markets into year-end and early next year.

As for a playbook, I’m going to sell 1/3 of my QQQ and SPY puts here. Holding the rest. And if you haven’t nibbled any of the Revolution Investing long-term stocks that you’ve been thinking about, it’s probably a good time to nibble a bit here. But there’s still more risk to this cycle and corporate earnings and casualties from The Great Trade War of the 21st Century and what not — that I wouldn’t try to load up here. Remember back in 2011-2014 when I’d even buy some call options during panicky sell-offs like today’s action coming after this week’s whoosh down? This isn’t 2011-2014. Maybe nibble. Don’t be greedy. Don’t be scared.


Related posts:

Riding the bull: Trade Alert - Taking profits on the Dollar shorts and also on some Sandisk calls
Trade Alert - Neil Patrick Harris, psychosomatic sickness, and tranche buying
Trade Alert - More insurance, hedging and some call options too
Trade Alert and Latest Positions - Selling calls down, getting less aggressive
Trade Alert - Taking the huge profits on my PLUG puts and listening to the bears growl
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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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Comments

  1. carl tropper says

    December 10, 2018 at 8:31 am

    @cody Is it too late to buy a few puts?

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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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