Weakening Wednesday – GameStop and Bust!

$4,000 per contract (you're welcome)!

That's the profit from yesterday's Russell (/RTY) Futures shorts at 2,180 as we're now falling back all the way to 2,100 and we'll stop out 1/2 here to lock in $4,000 per contract and put a stop on the other 2 at $3,500 per contract (2,110) so our worst case is an average exit of $3,750 but we can make another $2,000 per original (4) contract if we have another 80-point drop from here.  

We don't try to make a massive killing on the Futures, they are just bonus protection until our hedges begin to kick in and they allow us to make quick profits when the market has a little dip.  In yesterday morning's PSW Report (just $3/day to make sure you don't miss it!), we also played the Dow Futures (/YM) short at 31,000 and we're below 30,500 now (1/2 stop, rest at 3,600) for another $2,500 per contract win and the Nasdaq paid $20 per point from 13,500 (a GREAT shorting line) to 13,350 ($3,000 per contract) and we set the stop there at 13,375 on the other half and the S&P (/ES) Futures paid $50 per contract from 3,850 to 3,800 ($2,500/contract) and you KNOW 3,800 is going to be bouncy so we stop out there completely and simply re-play it if it fails but why play out the bounce?

You HAVE to have hedges in such a clearly broken market.  We went over our main hedges in our Short-Term Portfolio Review two weeks ago and discussed it in that day's Live Trading Webinar, so I'm not going to get into it here but we had a good $293,000 worth of protection, not including A LOT of additional profit if TSLA and CMG ever come down to Earth.

Thank goodness we didn't bet against GameStop (GME), which left the Earth last week and is now passing Jupiter, not at $147, which was yesterday's close but at $225 now – and that's AFTER pulling back from $350 in yesterday's INSANE after-hours run-up that bought the market cap of GME to over $22 BILLION.   

That's for a Retailer who makes $400M in a good year…
continue reading