Each evening our premium members receive an evening “Wrap Up” highlighting the days action in the indices, as well as our current open trades. Here is an excerpt from our note sent out this Thursday evening after the close of trading.
OVERVIEW: The Nasdaq Composite took a hit as we expected losing 1% on the session picking up its third distribution day in the last six sessions. The index did lose one day due to time today at the close, and has five total over the last 24 sessions, and it will lose another after the close tomorrow. While it is good to see the index losing some older distribution days, the cluster that have hit recently has my attention. Meanwhile the S&P 500 looks a bit more tame as it too lost a distribution day today leaving the index with only four on the books, and its losses today were much more modest as volume fell over yesterdays session. The Russell 2000 gained 0.54% today but did finish off of its earlier highs. The index lost an old distribution day as well, but still has a high total of seven over the last 25 sessions…. As I mentioned last night, we may be in the midst of a rotation, or perhaps traders are taking a bit of a defensive posture, but my trader instinct had me taking some money off the table and purchasing some Russell 2000 puts… hold some puts as a bit of protection should the recent distribution in the small caps turn into a larger sell-off…
Here is a look at how the small caps closed on Friday.
Members who followed our alert and purchased the August 10th expiry puts in IWM netted gains of 100-150% overnight. You can join myself, as well as veteran trader Greg Krupinski at http://www.ttptrading.com to receive real-time stock and option trading alerts as well as in depth coverage of the indices, market sectors, sub-sectors, nightly reviews of all open positions and much, much more. See you there!