After a great deal of solid wins since December 2013, we have run into losers in one of the most troubling months for the markets in recent memory. We may have closed out nine solid double-digit wins since August 2014, but we have losers after the markets 350-point plunge off the highs.
Last Thursday, we fell 265 points on an over-extension we’ve discussed. The next day, the market shot up 165 points. By Monday and Tuesday, the market lost its mind again. On Thursday, we dipped before recovering.
And today, we’re up 120 points because folks believe unemployment is now below 6%. It’s not, though. The participation rate has now fallen by 95 million people. The real unemployment numbers are significantly higher.
One of the biggest losers we’ve seen lately has been our Cree (CREE) trade. We’re recommending that you sell to close the CREE December 42.50 call for the moment. We will look to jump back into this to make up for the loss because CREE is now insanely undervalued.
There is some good news though…
After hearing that some of you could not exit half of the MCD December 95 or January 95 calls the other day for gains, we have a second opportunity to do so today. If you did not exit half on that previous alert, do so today. And be sure to hold the second halves of these two trades.
We also have an opportunity to close out half of the Staples (SPLS) December 13 put. After picking this trade up at $1.10, we’re seeing a slight gain as it now trades at $1.40 x $1.50. Only exit half. We want to protect should the market decide to go bonkers and fly off the handle again.
Look for many more wins, and less loss shortly. Something has to give with this market already.
Ian L. Cooper
Forgotten Profits