I’ve been a trader for 16 years. And I’ve never seen a market this rigged or this disorganized.
One day, we’re up hundreds of points.
The next day, we’re down hundreds of points.
We’re now stuck in a directionless market that’s just bouncing inside a channel between 17,600 and 18,200 over and over again.
Unfortunately, there really is very little to get excited about in the market. Consumer spending, which accounts for a great deal of GDP, just hit a three year low. Yet the Dow is up 120 points. That makes no sense.
Unemployment is pitiful. Yet, we’re up 120 points.
Very little makes sense in the markets right now. While we continue to hold all open positions in the portfolio, moving some of your personal funds to cash is a good bet at the moment. Eventually, reality will give way to steep market declines.
I have a hard time issuing a trade just to issue a trade in a market like this. I’m not willing to put your money at risk when tomorrow, the Dow could fall another 300 points.
The other day, we opened a hedged bet on Dreamworks (DWA) with a May 24 call and a May 24 put. At the moment, the put is down, but we’re holding. The call is showing a good gain, though. Consider selling to close that call for gains while holding the put.
The only reason DWA is moving up like this is because of the success of a single movie. Once the hype dies down, and reality returns, the stock will come back down from overbought conditions in a hurry.
I am working on new trades. But I don’t want to just issue them to just issue them. My job is to help make you money, not risk your money to a market with no direction.
Stay tuned.
Ian L. Cooper
Inside Value Trader