Archive Category: Wednesday Windfalls Alerts

The debt ceiling debacle remains unresolved. And with the deadline fast approaching, investors appear to be growing anxious. The S&P 500 Index has suffered sharp losses today and yesterday, losing more than 2% since Monday’s close. And the sell-off has hit a wide swatch of stocks, with nearly 80% of all stocks on the New York Stock Exchange trading down today. Fortunately, one of the stocks we made a bullish play on — Vodafone Group PLC (Nasdaq: VOD) — has gained 1.2% since our Monday entry. This is giving us what I expect to be a slight gain in the VOD call options we bought. Even more so, we have a “hedge” play in our call options on the ProShares VIX Short-Term ETF (NYSE: VIXY).

Debate over the U.S. debt ceiling is heating up. Biden and McCarthy met last night for several hours and have another meeting scheduled for today at 5:30 p.m. ET. Frankly, I hate that my role as an investment strategist almost necessitates me mentioning this potentially market-moving event. The whole thing is in large part nothing but an act of political theater. What’s most strange to me is that everyone seems to be waiting anxiously for the debt ceiling to be successfully raised … so they can celebrate and see “clear skies” ahead for risk assets, like equities. But we know the debt ceiling will be raised eventually, one way or another. As I see it, that should be priced in already.

Log In Enter your username and password below USERNAME OR EMAIL PASSWORD Forgot Password?Register Remember...

Today’s trade alert calls for a bit more explanation than usual only because I’m recommending a long trade on the ProShares VIX Short-Term Futures ETF (NYSE: VIXY). In layman’s terms, VIXY is a “long volatility” vehicle. And that may sound odd since the Wednesday Windfalls strategy is designed to take advantage of seasonal strength in stock prices between Monday afternoon and Wednesday afternoon. Volatility — and by extension VIXY —  is: a) not a stock, and b) negatively-correlated with stock prices, typically.

This morning’s rally was promising but proved to be short-lived. The latest inflation report showed a degree of moderation. This opened the door to speculation that a pause in the Fed’s rate-hike cycle is becoming more likely. But the broader stock market didn’t hold on to those early-session gains, and shares of the three stocks we played this week are down alongside the indexes. At last glance, shares of International Business Machines (NYSE: IBM), Gap Inc. (NYSE: GPS) and Cleveland-Cliffs Inc. (NYSE: CLF) were down 1.1%, 2.3% and 3%, respectively.