Strap in for another wild one!
We fixed our targets yesterday morning, in the main post, at Dow 11,300, S&P 1,200, Nas 2,575, NYSE 7,100 and Russell 685 and, at 10:46 in Member Chat, my comment was: “Past 10:30 without breaking 10,300 and the Dollar over 78.20 so over 78.25 is a good reason to tap the DXD hedge or grab the DIA FRIDAY $111 puts, now .98 so let’s watch that VERY CAREFULLY although it could just be a bit of profit taking into the EU close with the DAX up 12% since Friday morning. A pullback to 10% (from the DAX 5,000 bottom) is very much expected here and EWG naked calls can come off the table for now until they prove they can break $20.”
We ended up holding that 10,300 line through the afternoon but we finally broke down at 3:07 and we stuck to the plan but my adjustment on the trade idea for Members in chat was: “Game on for the DIA puts but now we can pick up the $112 puts for $1.10 – 10 in the $25KP with a stop at .90 in case we dive into the close.”
Those puts came off the table at $1.65 into the close, up 43% in less than an hour and even the original idea of the $111 puts topped out at $1.40 for a nice 43% gain on the day (but those took 6 hours, so not as good an annualized rate of return!). As I noted to Members in this morning’s Alert – these are the kinds of quick adjustments we can make to re-balance our portfolios on the fly in a choppy market.
We don’t want to let ourselves be chased in and out of short-term positions by these silly market fluctuations so we make quick adjustments with even shorter-term momentum plays that help us ride out these little moves. As I said to our Members during the afternoon drop “I’m not changing my stance because Meredith Whitney told me to.” That was at 3:48 when people were asking if we should panic out of our bullish positions on FAS and other trades. At 3:29 I had already pointed out: “Also Whitney was no help – same BS as usual when they want to halt a rally. Next we hear from Roubini, Gross and El-Erian.”
That…
