Whipsaw Wednesday – Beige Book Edition

Wheeeee – that was fun!  

Our trade idea in yesterday morning's PSW Report was, very simply: 

Our favorite short at the moment is oil (/CL) below the $48.50 line with very tight stops above.  We also like the Russell (/TF) below the 1,415 line – tight stops too. 

Oil went the other way and we never got a proper entry but the Russell was perfect and gave us a long chance to go short at the open and then promptly began falling straight down to the 1,400 line for very quick gains of $750 per contract.  This morning we flipped long at the 1,400 line, expecting at least a strong bounce which, after a 15-point drop, per our 5% Rule™ would be 6 points – to 1,406.  Anything less than a strong bounce that holds into the close will be a bearish sign for tomorrow.

The market sold off for very good reasons but the selling volume was still pretty low (89M on SPY) though declining volume on the Nasdaq (1.36Bn) was 272% of the advancing volume (50M) so it's very unlikely that everyone who wanted to raise more cash got their wish on just yesterday's action.  

Still, if we do make our strong bounce lines we'll have to stay long as this market has been indeftigable all summer long and it's not the kind of tide we want to be fighting.  I did just send out a Top Trade Alert this morning with long trade ideas on Apple (AAPL), Wheaton Precious Metals (WPM), Limited Brands (LB) and IMAX (IMAX) which I will also be speaking about with Kim Parlee over at Money Talk this evening.  

We're going to start a Money Talk Portfolio as we are retiring our Nasdaq Portfolio due to a change of policy over at the Nasdaq where they don't want specific trade ideas discussed (they don't want to seem like they are favoring one stock over another) so, officially, we're done with that portfolio as it stands:

Though the portfolio is up 19.6%, we never deployed much of our $25,000, using less than $10,000 in cash to make $4,890 (49%) in less than 5 months.  The SQQQ spread is losing, at the moment and is currently net $3,565…
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