Market Analysis and Trades for 2/24

1 Long and a Couple short Ideas

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The weekly post and for SPY 0.00%↑ and QQQ 0.00%↑ should be reviewed prior to this. Link to Market Analysis for The Week Ahead

The shameless flex recap section is a bit long, but I think it provides some insight into my views here. As always, I’ll remain objective in my analysis of price but there are times to be aggressive and times to be cautious. Many accounts were badly damaged the last two days. My swing account was green both days and long-term accounts barely registered a change.

We have been quite cautious for some time, particularly as we approached 6145.66 SPX and the 6160s on ES. I had broadly raised cash and had a hedge in place against UPS 0.00%↑ JNJ 0.00%↑ UWMC 0.00%↑ and FXY 0.00%↑ longs. FXY calls and JNJ were bright green on Friday, UPS was basically flat, and UWMC was down (had just taken profit. We have remained positioned conservatively so these big down days on the index don’t hurt. We had exited ACHR 0.00%↑ on Wednesday after taking profit on Tuesday’s pop as we had expected an unwind in MTUM 0.00%↑ which would impact ACHR.

Momentum had a pretty bad couple of days and ACHR did as well. Sidestepping drawdowns is often more important than nailing profitable trades. Capital preservation is always first for me.

I was driving with no service for most of the first hour, but fortunately we had identified the strong selling at the open on Thursday and the same thing happened so subscribers at least had the opportunity to recognize it quickly. ES was trading just under 6100 at 10:24 EST when I finally had service for a moment:

I used the pop to 6102 to add to the hedges and then exited some of the index exposure I wanted just a bit higher.

I went ahead and took a lotto ticket on 1 week ES puts as a I had a suspicion that a major sell was coming:

These went from $7.6 to $27.5 and I closed around $25

The question everyone wants to know is whether this is just another buy the dip opportunity or if something larger has starter. From the above, one can see that I am clearly concerned that something bigger could be starting or start soon. I have not been meaningfully short the markets since the January low. That may change this week if I continue to see what I need from sellers. If not, then I look forward to trading against trapped sellers on the long side. 😈

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