It is nice to be correct. The market was poised to a bearish trend and it sure did. In just two sessions we saw big sell offs. I was thinking what would push the market that down? Was it FED? I doubt this would be the only reason.
There are a few items I could find on the internet:
- China manufacturing index PMI dropped below 50 which is a sign of a contraction of their economy.
- As we saw yesterday, FED downgraded the US economy and predicts a big slump which will take several years.
- The “Twist” plan enacted by FED is a BS. Period.
However, from the technical point of view the market was poised to go down anyway. So more profits on downside. And I decided to preserve some of them by selling SPY early morning and now converting my CRM puts into a spread. I sold October $120 strike puts and collected $849 credit (preserving my gains made by holding naked puts). That limits my risk to literally zero and provides a reward of making another $1600 per spread. What a great risk/reward ratio!
Happy Trading!
I wanna those profits! Can I follow your investing tips? Do you have a newsletter?
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Over time, the strategy of sell in May has been a good one because so many people follow it. If everyone jumped on a different bandwagon the numbers would change. So, go with the herd and you are less likely to lose in general. Fighting the tape can be costly. Your reasoning may be the correct one, but the markets tend to do what the big money tells it.