Keeping Grounded During Bear Market Rallies

March 25, 2022

Dear Trader,

Happy Friday!

We’ve seen stocks roar back the last eight trading days, but these rallies are normal in bear markets. 

This is why it’s important that we don’t get caught up in the headlines that move the markets up or down. 

And no one knows how this is going to play out. 

In an unprecedented move, the US dropped what’s equal to a financial dirty bomb on the Russian citizens. 

This has caused the Ruble to freefall and Russian stocks to crater. 

It’s too early to tell the systemic effects this will cause worldwide, but it’s going to cause a tsunami. 

The FOMC took a dovish approach with rate hikes, but they are out of bullets. 

The best way to keep our ships steady is to focus on the market and not our PnL.  

As I often say, up, down, or sideways — there’s always an opportunity.

And in the last two weeks, we were able to close out two big winners, but we do have a trade that does expire worthless today. 

Before we recap our activity this week, Let’s talk about the CBOE Volatility Index (VIX), aka the “fear” index, which closed at 23.

That’s an 8 point decrease from last week's reading and even though we’ve seen it drop, volatility is still higher than normal.

We’re in a bear market regime, so expect to see rallies like today sold. 

Now let’s talk shop.

Portfolio Update

Today, this position will expire.

PFE March 25, 2022, $47/40 put spread

Unfortunately, we don’t have more time for this to play out.

There’s nothing that you need to do, and they will be removed from your account over the weekend.

Taking losses isn’t fun, but without the bitter, the sweet isn’t as sweet.

But remember…

The sweet part is making money and losses are part of the process.

You may have noticed that your trade alerts look a little different. 

We rolled out a new alert system that provides the exact trade through SMS.

Here’s a recap of what we did this week.

On Monday:

No action.

On Tuesday:

No action.

On Wednesday:

Buy-to-open the MRO April 01, 2022, $26.50/29 call spread

On Thursday:

No action.

On Friday:

No action.

Right now, we’re holding:

  • MLCO Apr. 14, 2022, $15 call
  • MRO April 01, 2022, $26.50/29 call spread
  • CCJ April. 14, 2022, $23/30 call spread

Have a great weekend and enjoy a fresh spicy margarita - TGIF! 

To your wealth, freedom, and options!

Joshua M. Belanger

Joshua M. Belanger
Joshua Belanger is founder of CounterVest and the editor of Hot Money Trader. He has been providing ordinary investors blockbuster returns since 2008. In 2018, the average return of Hot Money Trader beat the markets by over 15%