Archive Category: Wednesday Windfalls Alerts

We’re back at it after an off week for Memorial Day! The broad market has moved sideways over the past five days, alternating between up and down days that keep investors guessing. Typical “consolidation” patterns resolve in a strong breakout in one direction or the other. Of course, we can’t control or predict the market’s every next move. We can, however, position ourselves in “high-probability” plays that offer both higher-than-average odds of success and potential payouts that are many multiples their risk.

A gentle reminder: The markets — and our offices — are closed Monday, May 30, to observe Memorial Day. As I mentioned yesterday, we won’t have a Weekly Trade Wrap video this week.

The market has been stubbornly flat since Monday afternoon. While I’m sure longer-term investors welcome that respite during this bear market, we’re short-term systems traders … so we need movement to make money! Two of the stocks we played this week will hand us a loss.

The market is starting the week off with a bounce. The major U.S. indexes are up around 2%, and about three individual stocks are up for every one that’s down. Of course, for longer term buy-and-hold investors, it’ll take more than a one-day or one-week bounce to restore the value lost since the early January top. But we’re short-term systems traders, so we’ll look to take advantage of any bout of renewed risk appetite we can capture. Often, when risk appetite returns … investors swoop in to buy some of the most beaten down names.

The rallies we saw yesterday fizzled today. Each of the major U.S. indexes is now trading below yesterday’s and Monday’s lows. The three stocks we played this week are holding up a bit better than the broader market. But we need price increases in the underlying shares of the stocks we play, or else the value of the call options we buy erode with time. So while this week’s portfolio was around breakeven shortly after the open, the mid-morning sell-off has since put them underwater. We’ll have to take a loss this week.