Follow Up – (IWM) April 3, 2012

As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.

FOLLOW UP
Explanation to Previous Trade:

Buy the Russell 2000 iShares (IWM) June, 2012 $83 puts at $3.30 or best

Opening Trade

4-3-2012

expiration date: 6-15-2012

Portfolio weighting: 5%

($5,000/100/$3.30) = 15 Contracts

I think the Federal Reserve’s statement today hinting that further quantitative easing in now on the missing persons list is a game changer. It was the prospect of a QE3 that has been powering stocks for the past six months. There have been few macro economic and fundamental reasons to load the boat with equities beyond the endlessly running printing press.

Take QE3 away, and you are left with one of the sharpest upside moves in the indexes in history and a rapidly diminishing number of buyers. The bond market was really telling the whole story today, with the ten year Treasury bond up 15 basis points in yield to an eye popping 2.29%, and the (TBT) up a very healthy 5%.

There are now a vast number of technically driven programs predicting that the (SPX) hits a top for the year at either 1,450, a huge Fibonacci number, or by April 19, which ever comes first.

If we keep edging up I will scale into more aggressive short position in the S&P 500, NASDAQ, and financials. And who knows, Apple puts might even make
sense in the near future. I’ll stay away from volatility plays until I am convinced the instruments aren’t broken anymore.