Market On Open - Monday 26 February

Still No Selloff… Wen Selloff?

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No Words

by Alex King

Right now the charts say more than I can. Markets have run up; plenty of cash, particularly retail cash, remains on the sidelines; and more professional investors than one may first assume seem to have missed much of the tech boom in the last 18 months - so seem to be playing catchup. So to repeat - there is zero possibility that this market does not retrace at some point but until it does so, it hasn’t.

A Word On Hedging

Per real-time trade alerts that paying members received prior to these trades being placed - last week I exited two out of three short hedges that I had opened a few weeks prior; the shorts were bought to hedge during a time I knew I would be busy and couldn’t pay the proper level of attention to markets to manage sizeable long leveraged ETF positions. As it happened the market moved up and those shorts moved down. I corrected for this by overhedging long (moving to 2:1 SOXL:SOXS, and adding an unhedged UDOW position). A short term Nasdaq dump meant I could exit SQQQ at a small gain just prior to the NVDA earnings print. My SOXL overhedge plus the UDOW naked long meant that by selling SOXS, SOXL and UDOW I exited the three with a net zero ie. no damage from the SOXS hedge. I still hold SPXU at a loss. I have a small naked long TNA position which may help assist with SPXU; I will add to TNA if the Russell moves up with the goal of at least partially offsetting losses in SPXU. Whilst one’s execution is never perfect, this is an illustrated example of how to use hedging and overhedging to one’s benefit - it has meant that the whole time I could hold large long TQQQ and long UPRO allocations without fear.


Paying members of Inner Circle, scroll down for our long- and short-term take on the S&P500, the Nasdaq-100, the Dow Jones 30 and the Russell 2000 - including the regular ETFs, the futures, the 3x leveraged ETFs and then finishing with a take on sector ETFs in semiconductor, tech, and the Fangs.

(Not a paying member? Sign up right here. If you’re not sure about committing, just take the monthly. If you like it and want to take an annual, we’ll deduct that first month’s fee so you’re not out of pocket. If you hate it, you’re down only $299).

Note - to open full-page versions of these charts, just click on the chart headings, which are hyperlinks.