Groundhog Day In mid-February we had just come off a 10-week run being long TSLA calls with some of the early ones generating 1,000% gains. That was just as the market was on the cusp of a 35% crash over the next six weeks, a crash that we caught a good part of with an aggressive put-option trading strategy. Yesterday was the culmination of a 10-day pounding the table campaign to buy TSLA calls. We were rewarded with TSLA rising 200 points into yesterday's all-time high at $1,027.48. The calls were all up several hundred percent. Today, as was the case in February, the stock market again fell over a cliff, breaking important short and intermediate term trend lines. The next six weeks should be a repeat performance of Feb-Mar. Into The Close As of mid-day the deep decline from overnight futures found some support right around a key level Dow 25,500...but now going into the last hour of trading it has sliced right through. It would take a sharp recovery into the close to mitigate this bearishness. Continued weakness into the close today would signal a worst case scenario and a reason be overweighted on the short side. Going into the last hour of trading, things are looking, and feeling, dicey. I've written some permeation of the above paragraph at many a market bottom over the years. But none of them shared this particular confluence of factors: (1) Bullish sentiment spiking over the past few days; (2) The completion of a 10-year Elliott Wave bullish up trend (although Prechter says it's the end of a 250+ year uptrend); (3) An outburst in negative social mood exasperated by the resurgence of an increasingly ominous global pandemic; In other words, the ingredients are in place for, "the big one," on the downside. The perfect storm within a perfect storm. Trades Since both the Premium and PRO trading portfolios are currently well positioned to benefit from further downside, the few "Pending Sell Signals" shaping up for the close will be held in official abeyance until the morning: AAL, DIA, EEM, IWM, LVS, WYNN. For anyone wanting to get in before the close, the general rule for options here is: Expiration: Next month (In this case "next month" is July). Strike: Closest strike out-of-the-money. DIA
