In this space last time I said I thought the stock market would likely make a V bottom and rally, and did not think a major correction was in the offing. Friday certainly tested the medal of that view with a drubbing that closed at the low of the day and the week. As usual the stock market makes one question their conviction before it bottoms. And I do believe it made a V bottom with Monday recovering most of last Friday’s losses. CPI and PPI are this week, and no matter how hard to believe the numbers that purport to be CPI (which you will understand that comment if you for instance buy groceries and/or eat at restaurants). However the number still seems to be important to the market. Though my view is dips will be bought going forward,


The star of the stable as I have been pounding the table on for months is TLT (chart). It is back to areas where hedging long term calls with out-of-the money short term calls is favored. If any of my call shorts finish in-the-money… I will roll up to a higher strike and further expiry. I have exited one of my 4 TLT spreads with 120% gains. I will keep the other three and look to re-establish another one if and when TLT dips again. Great RR, high probability trade. These don’t come very often. Buy the dips with very far dated calls, sell against them on the rallies.
Thanks,
Joe
Recent Comments