One of the first things I learned working on the floor of the Chicago Mercantile Exchange (CME) is that every day is a new day.
No matter what happened the day before, pit traders would slowly roll in ahead of the opening bell to review their positions but were still always excited about the opportunity the market would bring that day.
Up, down or sideways — there’s always an opportunity.
Some days, weeks or even months are better than others, but if we keep our mind and capital right, we will come out on top.
First, let’s talk about the market’s revived wave of optimism on U.S. economic growth, which notched the S&P 500 to a new all-time high.
Two other major indexes are lagging, with the Nasdaq-100 less than 2% and Russell 2000 15% from all-time highs.
We continue to see money move from one sector to another like a game of hot potato.
The rotation out of high-growth technology, precious metals and Treasuries flowed into financials, energy, and materials this week.
Next week, we could see that flow reverse back.
The recent move has put the "fear gauge," the CBOE Market Volatility Index (VIX), for the S&P 500 under our key level of 15 — which means risk is back on for now.
As we’ve seen before, though, we are just one tweet away from a quick move lower.
Portfolio Update
First, let’s talk about the positions expiring today…
Corning Inc (NYSE: GLW) September 13, 2019, $27 puts.
Despite the rotation out of Technology, the ripped higher off its lows and didn’t look back.
Unfortunately, we don’t have more time for this position to play out.
There’s nothing more frustrating than watching a trade go in the opposite direction right after you enter.
This will expire worthless today, and it will be removed from your account.
Taking losses isn’t fun and can be frustrating. That is why position size is so important.
(I talk about position size in Your Hot Money Survival Guide. If you haven’t read it, I recommend you take a look. Simply click here.)
Over the long haul, your winners will outshine the losers… We stick to a system.
Let’s talk about our newest positions for this week.
On Tuesday, we bought to open Transocean Limited (NYSE: RIG) Oct. 18, 2019, $6 calls up to $0.30 per contract.
On Thursday, you received a bonus flash alert to buy to open Goodyear Tire & Rubber Co (NASDAQ: GT) November 1, 2019, $15 call up to $0.55 per contract.
I’ve been watching Hot Money pile into this and on any pull-back on the stock, someone has buying. Something is cooking here and we could see this pop higher on Monday.
Right now, we’re holding:
· Transocean Limited (NYSE: RIG) Oct. 18, 2019, $6 calls
· Goodyear Tire & Rubber Co (NASDAQ: GT) November 1, 2019, $15 calls
· Barrick Gold Corp (NYSE: GOLD) October 18, 2019, $22 call
As always, keep sending your questions and feedback to [email protected].
My team and I will have a new trade for you on Tuesday.
To your wealth, freedom, and options!
Joshua M. Belanger