Christmas in May
Preston Sturges and the Put/Call Ratio
While I’m working on some wonderful, mind-bending stuff to share.
Wanted to share some brief insights on what the big data is saying.
And one possible hedged trade…Something I haven’t discussed recently.
A hedged trade is when you buy one thing, expecting it to go up, while selling another item, expecting it to go down. And if both go up or down together, you are expecting outperformance of one or the other.
With commission-free trading, this is easier than ever.
At the moment, it’s like the movie Christmas in July, as the markets are just giving and giving gains, like it was 2000, 2007, 2019.
Why do I mention Christmas? Because that is usually the time the markets are virtually bullish and liquidity low and the Put/Call ratio are at lows
And yet it’s not Christmas time.
So will the markets only go up?
No.
The entire market is bullish now, and you don’t want to be stuck in a crowded trade.
So you can short the market (bet prices go down), close trades, put on some insurance options (as you can see NO ONE is buying insurance puts on their stocks), or HEDGE your trade with a laggard index.
Remember
Bulls make money (Jim Cramer)
Bears make money (hasn’t really been proven lately)
But hogs get slaughtered (if you don’t have friends in Washington)
The breadth picture, which shows what the cumulative view of stocks is doing, is diverging from the index highs.
https://www.marketinout.com/chart/market.php?breadth=advance-decline-line
But the volume of the stocks has surged.
See anything interesting?
What I see is that the FTSE, the UK index is underperforming the general markets and US in particular.
So a sell off should make it underperform and unless the big macro data is not picking up on it, it shouldn’t go up as much as the big US markets
Sooooo…..
Long SPY
Short EWU
The problem with hedged trades is that you need more money in your account to make it worthwhile.
Today, I would be wrong by 0.94%
Of course, you will want leverage
Well, that requires options, or margin, and more time than a free daily email.
But there is hope, paid subscribers should be expecting a blueprint of some hedged ideas after my wonderful blueprint on weekly investing is finished.
Stay tuned.