Tue, Feb 05, 2019

Market Context
Good day all,

The first few trading sessions in 2019 are in and it was anything but dull and boring. Hard to believe it was possible considering that Fed Chairman Powell seemed to make it a personal mission of his to destroy chances of there being any glimpse of a bull market.

In updates to our Astute Insiders (subscribers) this week, I expressed concern as the first trading day came to close and we closed a measly 3 points higher in the SPX. Accordingly, I sent out the update to hedge the SPX and low and behold it lost 62 points. Before the close Thursday, I had said that we should see a relief bounce heading into the trade talks between China’s President Xi and President Trump scheduled to begin this coming Monday the 7th. Here we are looking at a Friday of +80 and +700 point bounce in the SPX and Dow respectively. Quite a way to close out the week.

So where to now? In an update on Jan 2nd, 2019 I said “Here in 2019, we opened the day in a sea of red and there has been some buying since. I will express my opinion here and say that we are likely going to see a lower low (than the 26th) in mid to late January. It is with this opinion that we are getting our hedges in order to protect our long positions from being hit and our capital depreciating.” The 26th is referring to December 2018.

I stand by this opinion as price action has not told me otherwise (yet). The December 2018 low was 2346 in the SPX and 21,712 in the Dow. I had mentioned 21,600 in the Dow as being the figure to watch for December 2018 and it remains to be a key figure here in 2019. A close below that and we are likely going lower, with some substance.

Protect your long positions. My 2019 prediction for the market is that we go much higher than where we opened to begin of the year, but nowhere close to a straight line. We are bound for lots of volatility and when utilized as subscribers have seen, profits are bound.

Risk & Reward
Our SPX Hedge for February 1st, 2019. A close between 2480-2350 and there is lots of profit to be had. To put the range into perspective we closed today at 2531, the SPX needs to see a drop of less than 2% in the next 3 weeks!