Tuesday March 18, 2014
RandomWalkTrading.com
1–(855)–RWT-0008
Yesterday I tried to do a Recorded Version of the Morning Update for the Condor-copia class. Today I did it for everyone.
This is a test for when things get very complicated and words alone will not suffice an explanation. You will have the link in your email. If you have not updated your computer to accept one of the recent versions of Flash or Adobe, you may have problems. Just send an email to the office and they will send you a written solution to the problem.
Beware the Ides of March
Shakespeare’s prophecy in Julius Caesar
The Year of Selling Premium Has Started in POT
The Dow closed up 181.55 points at 16,247.22
AAPL was up a measly 2.05 to close at 526.74.
The VIX was DOWN 2.18 at 15,64
Closed down 0.81 at 107.71
GLD = closed down 1.46 at 131.64
SLV = closed down 0.29 at 20.33
Tesla
Tesla closed up $3.01 at 233.98
RSX (Market Vectors Russia)
Up 0.65 at 22.46.
This stupid index has been down about 30% in the last 3-5 months, so being stupid I got long it in POT . Who doesn’t want to buy “the end of the world”? POT people, keep in mind we are long 20 naked May 22 strike calls that are NOW ITM. calls (ya…Hooooo!).
Yesterday
I did the morning update Sunday at dinner time. After that I could not sleep as I felt I was missing something, so I did a SPECIAL UPDATE at 3am. In it I stated that I thought the Dow may be up as many as 200 points today (Monday).
Why did I say that? I took the worst day last week that led up to the Ukraine issues, and then reversed it. Something about Friday bothered me when we could not sell off more than 43 points going into what most people would consider a very scary weekend as far as international events are concerned.
Going into the government created shutdown mess we fell 1,000 points. Syria saw us fall 1,000 points. Now we are restarting the cold war (possibly) with Putin and we can’t sell off more than 500 points. As scary as members of the Senate are, they are not as scary as what could develop out of Russia’s strong (and possibly illegal) actions, and America’s rather …uhmmm…..hmmm….let’s see….ummmm, SISSY-LIKE reaction. We did steal an unarmed Libyan freighter carrying oil, though.
So I felt that as long as Russia gets its way and Ronald Reagan is not in office to slap Putin silly, America will do NOTHING and that is fine for the stock market (for now only).
Today
The Fed is tapering. The Ukraine is being taken over, much as if Texas decided to take over Georgia. Our President responds to every world event with a great speech and a round of golf. I guess he is making up for all the time when he didn’t work and couldn’t afford the green fees.
The recovery we have is anemic and only seen in the stock market. Housing stinks. Prices are only climbing in real estate where they were hit the most, and banks still have a lot of homes on their sheets. The middle class is being eradicated. The cure for unemployment has one solution…pay people who are working a higher minimum wage and give them overtime (not sure how that fixes the unemployment, but I am not as smart as the average Congressman.
But despite all these problems we are 1.3% away from all time highs in the SPX. Only 25 SPX points and it is a new high. The Dow is 341 points away.
Remember what I said when the Fed started to taper and we got a new Fed Chairperson. Both of these events will hurt the market, but it usually takes about 6 months to occur.
So I think we are still on course to climb the wall of worry. Then get one last feeding frenzy for stocks. Then the bottom falls out when no one sees it coming. Right now too many people are looking for it. Crashes are like Santa Claus…they only come when you are asleep.
He knows if you been good (studying and hedging),
and he knows if you have been bad (greedy and complacent).
He (Crashes) know when your sleeping. He knows when you are awake.
So you better not pout and you better not cry.
You better learn to hedge yourself, I’m telling you why.
The Santa Crash is Coming to Town
(When Rocco becomes bullish).
This is out of the norm, but we have on some wonderful downside hedges, short premium, and long deltas for when the bounce comes. (Monday’s writing).
Key Trade To Watch?
Hedge Below
The above example was done for a -$1.20 and closed at $3.35. This expires Friday. The great thing about this trade is:
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The market may NOT move that much between now and Wednesday as the Russian’s are going to “take over the Ukraine” on Wednesday. Actually I think it is a little late to use future tense, but you know what I mean.
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Time decay is kicking in faster and faster.
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We are right NOW at the golden -sweet – spot. A Dow close of 16,000 – 16,300 could mean $14, 000 on this trade…..a LOT MORE than the risk we were looking to hedge. That would pay for POT for what….a decade? Nice!
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One has to be right once in a blue moon, right?
New POT people. Keep in mind that new people are always lost for a while. You are coming to a movie that has been going on for a while, so it will take a few days to catch up to the plot and characters.
A separate Update will be coming for POT.
Too True To Be Funny
I find humor in nothing this week. Just wondering when our soldiers will be required to get fitted for ballet shoes.
Attorney Stuff
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