Looks like we picked the wrong week to get bullish.
Good golly what a mess! After Obama blew his jobs speech on the 8th and the market dropped a quick 5%, we thought SURELY the Fed can’t be so stupid as to make the same mistake and disappoint the markets with an inadequate stimulus – especially after such a big build-up of our expectations.
Well, SURPRISE – what we got, as I told Members yesterday, was the VERY LEAST the Fed could do. Nothing would have been kinder because, had they done nothing – then at least we could have held onto the hope that they would do SOMETHING at some point. By doing something and that something being almost nothing – all hope is lost.
We lost all hope at 2:27, when the Fed released their statement and my immediate note to Members was: “Killing short-term bullish plays including buying back DIA short puts in Income Portfolio!” That same minute, my next comment in Member Chat was: “Game on for SQQQ plays and on any hedge with a bullish offset – stopping out the offset until we settle down is a good plan!” and, at 2:38, I put up an annotated view of the Fed statement and added the following conclusion in an Alert to our Members:
This is not terrible if seen as a first step but it’s a disappointment and now we will face the wrath of the markets. If you don’t have enough hedges then perhaps (in addition to our long-put list) and today and yesterday’s hedges:
- DIA Oct $108 puts at $2.20.
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