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Step By Step
After an hour or two of fake news yesterday in the pre-market session, markets ground higher all day with only the Russell 2000 still meaningfully in the red at the close of the post-market session. The Nasdaq was strongly up having been rather red earlier in the day. A great set of opportunities if you were sat live at your screen all day.
Premarket is down again today across the indices, nothing dramatic. No change to our view that the market is likely to move higher in the next week or two. In staff personal accounts our timeframe for short-term trades is days/weeks, we aren't sat live trading all day but if you are, again, there are many opportunities right in front of you in the indices alone.
Current Index ETF Holdings
A note on current holdings in staff personal accounts in case you are following these ideas. As you know from these posts we have been focused on managing the short side of our hedged index ETFs. We successfully sold TZA (3x short Russell) for gains twice over, took a small loss initially on SPXU (3x short S&P500) but then re-hedged and then sold on a short term plunge to bank small gains which paid for those small losses. A nothingburger round trip on SPXU but then that's what risk management often looks like. We have realized losses in SQQQ (3x short Nasdaq) and some unrealized gains in SQQQ - this position needs managing and once it's all sold we'll be taking a look at what SQQQ "owes" our staff personal accounts ie what was the total realized loss incurred. We'll report back on that. Rightly or wrongly how we think about that here is to say, well, that was a poor trade on SQQQ, must do better next time, let's see if we can recoup the realized losses incurred. This is purely psychological of course, because the gains in TQQQ (3x long Nasdaq) have way more than offset the losses in SQQQ and will, we hope, continue to generate strong gains from here on up. This being the point of hedged pairs of course. But still, realized losses sit ill with us and we like to correct for them after the fact if we can. We also have unrealized losses in both SDOW (3x short Dow) and UDOW (3x long Dow). We expect the long side to take care of itself but want to manage the short side. Per alert in Slack earlier today, SDOW at that time was showing a 5% loss, small enough to swallow if you are so minded. For us we will continue to hold both pending a decisive direction from the Dow and then act accordingly. We'll post disclosure alerts as always.
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Let's Get After It
For our paying members only let's now walk through the shorter- and longer-term outlooks for the S&P500, the Nasdaq, the Dow and the Russell.
We include more detailed Cestrian staff personal account trading plans in our charts - these are disclosures rather than commandments, we include them to (1) clarify our own thinking and (2) to help explain what we think about the direction of markets. Paying Inner Circle members can reach out in Slack anytime to discuss. You will, of course, make your own decisions as to how to use our charts in your own work.
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