Triple Top Tuesday – 3rd Times A Charm?

Here we go again.  

This is our 3rd visit this year to 1,880 on the S&P and maybe this time will be different and, if so, we’ll simply have to deploy some of our cash on some bullish plays.  Materials are still down, gold and silver are still low, Solars fell out of favor, Biotechs had a nice sell-off, China and Russia are low – plenty of things to buy if we’re really breaking back up. 

In fact, with the Nasdaq below 4,200, down from 4,400, that’s 5% off and TQQQ is the ultra-long 3x Nasdaq ETF and it’s at $61.45, down from $70 last month and you can buy the April $65/68 bull call spread for just 0.55, selling the $51 puts for 0.45, risking just $10 of cash to make up to $300 per contract if TQQQ recovers in the next 2 weeks.  $51 happens to be the 200 dma on TQQQ, so it seems like reasonable support, especially if the Fed keeps pumping in cash at the extreme levels they hit at the end of this quarter (and the last):

We were 3 full weeks into January before the market started collapsing so figure that’s the ebb and flow of all this FREE MONEY that’s being funnelled through the Banksters to keep up appearances.  We have a similar double top pattern now and we’ll see if this time is different and we break on through to new highs with this extra 25% injection of liquidity to top off the quarter.  

Of course, we’re not really bullish until we see those highs broken so I’d rather sell an AAPL Jan $400 put for $5.90 ($590) and that’s enough to buy 10 of the spreads for $450 and we make $3,000 if all goes well with a $140 credit still in our pockets and our worst-case scenario is owning AAPL for net $401.40 (25% off the current price).  That’s a fun way to hedge to the upside, which is why we’re in no hurry to pull our cash off the sidelines – we have lots of cool ways to make money. 

[Chart by Dave Fry]

In fact, I reviewed our 5 Member Portfolios in chat yesterday and they are all performing quite well and are full of great Trade Ideas we can begin adding back to our recently cashed out Income Portfolio.  As an experiment, we left our Long-Term Portfolio invested during the pullback but cashed in the Income Portfolio to see which one ends up performing better (they follow similar strategies).  It also gives our new Members a fresh chance to follow along, though we had hoped for more of a pullback before moving our cash from the sidelines.