Stocks sold off in spectacular fashion today, continuing a streak of selling that started with the last two trading sessions of 2014. When stocks made their final explosive push lower today, they began to sharply rebound, before seeing sellers take over into the close. Have stocks bottomed for now?
Five straight down days for the stock market. It's not something we saw often in 2014. The mundane, slow grind higher days of 2014 have morphed into sell first, ask questions later days of 2015. Is 2015 the year Buy the Dip dies? It's been working for some 5+ years now. More on that below.
The chat room was en fuego today. Options bought at $1 yesterday were being sold for $12 - $13+ today.
$CAT puts were being locked in for nice profits as well, and of course Twitter was going nuts.
[12:33 PM] arg uranium-pinto-beans: Sold my last 3 CAT 90P @ 4.60 from .43--Thanks UPB!! Great call
[12:24 PM] dweisbergnh: out TLT 131wc @ 1.90 from 1.07
[12:19 PM] louis631: glad you sold PCLN JB... just the kick in the pants I needed to finally sell. out at 12.20 from 1.15 yesterday. thanks for that great call JB!!
Jimmybob: Out half $PCLN 1050 puts @ 5.25 avg from .60
retiredMM: nflx sold bal of puts @ $4.50 cost .81
stocksaarohi: thank you JB - one of best trade for 2015 for me sold 2 PCLN 1075 calls from 1.30 to 13.00 each - great start to 2015 - JB Rocks!
$CAT hit $85 before bouncing today. I highlighted the potential last week and the $91 puts have moved over 800% since.
This chart I drew last week .... it looks like I took a trip into the future first before drawing it:
I think todays weakness will return but that $CAT will relieve some over sold conditions tomorrow.
$TWTR! $TWTR rocketed higher today surging over $39 a share. Just a few days ago with the stock stuck in the $35's I said that I was trading for a move back to $40. It's getting very close. $TWTR was one of my stocks to watch in 2015. So far its off to a great start.
Here is what I was saying about $TWTR heading into 2015:
Twitter was taken to the woodshed in the latter part of 2014. I really like this stock long term. It's not going away and it really has yet to tap the mainstream like Facebook has. I think this will change and the stock is on the cusp of a significant rally in 2015, that will surprise many. I still think this is a $100 stock in $36.50 clothing and will trade for that move to come this year.
Oil continued to plunge. This is a concern longer term and perhaps that is one of the reasons why the market is falling. Price stabilization or a modest bounce here I think would help the stock market.
$QQQ held support at $100 just like in December, this is a good sign.
S&P 500 futures have a nice rejection today of lower prices much like the December bottom. It ended a nasty streak of bear flags.
The US Dollar continues to rally. I would also like to see this take a breather.
Finally bonds continue to get bought with reckless abandon. This was another of my 2015 predictions that are coming true much quicker than I imagined.
(5) Bonds will continue to work the first half of 2015. Last year inflation was supposed to rear its ugly head, bringing bond yeilds higher. The exact opposite happened. Inflation remains eerily low considering all the actions of central banks around the world. Yields on bonds over seas of countries, who a few years ago were about to default of their bonds, are almost lower than government bonds here in the United States.... which is why we will see demand for US Treasuries remain strong in the first half of 2015. $TLT, the 20 year Bond ETF, will be the way to trade this. I think it heads to near $140 before the summer of 2015
Is tomorrow buy the dip day?
After five straight days of heavy selling, I think tomorrow the sellers will rest and we will see a rally. Whether or not its a relief rally, or something more constructive depends on the velocity of the rally. We need to see that classic V bottom rally that has moved us higher out of every recent pull back. Anything else will probably mean the sellers will resurface and send stocks to much lower levels. I think remaining cautious is key, but I also want some exposure to a possibly strong snap back rally.
I'll see you in the chat room. Have a great night.