TGIF – Hoping to End the Week on a Positive Note
Hi ho silver!
During Wednesday's Live Trading Webinar (replay available here) we decided to go long on Silver at the $12 line and we were rewarded early this morning with an explosive run to $13, which netted a lovely $5,000 per contract for our Members, which is the same as the $5,000 per contract we gained on the S&P (/ES ) as it popped from our 2,400 line all the way to 2,500 this morning before also stopping us out – salvaging $4,000 gains at 2,480.
A lot of that rally is fading as we get close to the open and we won't be jumping in again until we see where the bottom is as we got very close to 2,300 on the S&P yesterday so we'd really love to see that again for another Futures entry. The Futures are an excellent way to make money in volatile markets but you have to take profits off the table as things turn around very quickly. The EU markets opened at 4am and everything went sour then, which is why we take the money and run on a good rally before then!
Remember, it's very easy to rally the Futures as they are very thinly traded and, once the exchanges open, the volume sellers take full advantage to finish selling what they were trying to get out of yesterday so, if we closed on volume to the downside and reversed in the Futures without any Fudamental changes – it's very likely that the selling will resume in the moring until (if) the sellers become exhausted. That's especially true in a market like this – where sellers simply can't find enough buyers to fully unwind their positions.
A cynic might say that the sellers themselves manipulate the Futures (not to mention the news) in order to reel in the suckers who jump in and chase the momentum in order to give themselves a higher base to sell into the next morning – but not us. We don't care if the markets are manipulated – as long as we can figure out HOW it's manipulated and make money trading along!
This morning we can short the Nasdaq (/NQ) Futures at the 7,500 line and set VERY TIGHT STOPS above the line – just in case things turn ugly and we ride back to the lows. The /NQ pays $20 per point so just a move back to 7,400 will generate $2,000 in profits for each contract but /NQ was 7,150 at yesterday's low the risk is well-justified by the potential reward if today ends on a sour note.
Dow (/YM) 20,000 is also a good line to play bullish but VERY TIGHT STOPS below that line and 2,400 on /ES is still good if it holds, as is 7,400 on the Nasdaq (/NQ) – all should provide support this morning and, if they don't – well that's why we added another hedge yesterday!
Today is options expiration day so we'll be adjusting our Member Portfolios and, generally, we're going to make bullish adjustments as I think $3Tn worth of stimulus should be enough to hold the line for now but it's also very likely that the Government will order a complete shutdown of the US this weekend for at least a week in order to contain the virus (LA is shut now) as they've tested it in cities and no one has started a revolution yet so that's the only plan they have for now – to buy a week of time to slow the spread of the virus until we can catch up on manufacturing masks and respirators (and toilet paper) to deal with the next wave of infections.
Have a great weekend,