What an exciting start to the week!
As you can see from our Big Chart, we have the classic “Spitting Cobra” pattern forming with the Nasdaq already breaking sharply lower, but saved by the 50 dma and the 27.5% line at 4,200-4,220. Â
That’s going to be our critical hold this week and we also have to keep an eye on 1,840 on the S&P and 10,250 on the NYSE – whichever way 2 of those 3 go should tell us the story. Â
Of course we made gobs and gobs of money on yesterday’s sell-off in the Russell.  It was right there for you in our morning post and we also extensively discussed the Russell as our primary short last week, and in our Live Trading Seminar last Tuesday (and you can watch today’s live Webcast HERE at 1pm).  Here’s a nice chart from Chris Kimble that illustrates our point:
In Friday’s post, I noted we had tweeted out a call to short the Russell Futures (/TF) at the 1,200 line (and you can follow me on Twitter HERE) and that day’s drop was good for $1,000 per contract, down the the 1,190 line. Yesterday morning, at 8:50 am in our Member Chat Room, I reiterated my call to continue to short the Russell at 1,190 – which would come as no surprise to anyone who read my morning post.   The Russell proceeded to fall below 1,170 – good for $2,000 per contract gains less than two hours later. Â
For the Futures-challenged, we went with a TZA (ultra-short on the Russell) April $14/16 bull call spread at .64 at 9:41 in Friday’s Member Chat and those have already popped to .97, up 51% on that small correction in the Russell.  THAT is how you hedge!  Also in Friday’s post, we suggested the NFLX April $400 puts at $6.75 which finished at $28.50 yesterday – up 322% in two days – not bad for a free trade idea!  We also laid out this bearish spread on Chiplotle (CMG):
