As we predicted, we opened down half a point and then raced all the way up to our strong bounce lines before tumbling back to give up all of those gains and more - a major technical failure for the markets but a huge profit for anyone who followed our trade ideas in the morning post.
Using the bounce lines we published early in the morning for the Futures trades gave the following outcomes on that morning spike:
- Dow (/YM) Futures 17,000 to 17,350 for a $1,750 per contract gain
- S&P (/ES) Futures 1,965 to 2,010 for a $2,250 per contract gain
- Nasdaq (/NQ) Futures 4,120 to 4,180 for a $1,200 per contract gain
- Russell (/TF) Futures 1,130 to 1,155 for a $2,500 per contract gain
In fact, we also cashed in a couple of our bearish positions on DXD and SQQQ that were up significantly on yesterday's drop, leaving us a little bit less bearish ahead of the Fed - just in case they actually do something today that boosts the markets. We don't really expect it, but not taking 100% gains off the table is just foolish - we can always find new hedges to cover our longs with.
We're still bearish but it's more of a long-term bearish with some April TZA calls and a June SQQQ bull call spread that can pay us up to $90,000 in a significant downturn. Not that we hope that will happen, the spread only cost us net $3,800 because we timed our entry perfectly and now we have covered our bullish plays into the second quarter of next year.
Given that we are able to consistently make 500% returns on cash using AAPL options and since AAPL has sold off a bit into today's show and given that we LOVE Apple as a long-term hold, I am hard-pressed to find anything I can possibly call a Trade of the Year that I like better so - it's AAPL again!
Hopefully the markets won't be in free-fall this evening (if the Fed blows it today) or we'll have to make a bearish trade of the year - and I really don't want to do that because I'm an optimistic person overall. NFLX and AMZN are still around $300 and GMCR is $135 so we certainly have some exciting candidates to short but, if the FREE MONEY train is going to continue, so may the ridiculous valuations of those companies.
At the moment, we are expecting the Fed to keep things going and we're long on the indexes again at 17,100 (/YM), 1,975 (/ES), 4,100 (/NQ) and 1,135 (/TF) but with tight stops below and, if any two are below the line then none of them should be played.
It's probably going to be another crazy day in the markets - be careful!
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