Trade of The Month

Good day.

Before we get into today’s blog post, let me be really clear on one thing:

The buy and hold, buy the dip, passive investing market is DEAD. If you are not being VERY TACTICAL in this market….your future returns will be paltry if not negative.

Aspen Trading Group has been thoroughly enjoying this market and we have the trades to prove it. Want to join us?  Take A Trial

After the carnage in early February in which the S&P’s cracked violently lower and volatility spiked massively, it did not take long for the ‘Buy The Dip Crowd’ to come back in full force. To be fair, that strategy worked for years. However, given that it is based on a rather flimsy premise, it was doomed to fail at some point. And that point is NOW!

Prices rallied smartly off the Feb 6th lows but stalled right into a classic .618% Fib Resistance Level .at 2744’ish. Add to that weak internals on the way back up when compared to the other 18 rallies off lows of 2.5% since 2009.

  • Poor Improvement in the Advance/Decline Line (worst)
  • Weak Up Volume vs. Down Volume (worst)
  • Poor Relative Performance of Small Caps to Large Caps (second worst)
  • The poor performance of Emerging Markets (worst)

So, when prices started to stall and reverse on Feb 27th, we took advantage. Below is what we conveyed to clients. It was a fun and rewarding way to round out February.

Remember, 2018 marks the return of the trader and active manager! The indexers are realizing this game ain’t so easy. Pay attention so you don’t miss out.

Game on,

Dave and the Aspen Trading Group

Feb 28th Commentary to Aspen Clients

Traders,

It is starting to feel a little messy out there in S&P 500 land. Today’s thrust lower after pushing above 2760 is not a good sign from a technical perspective.

I am-reevaluating in here and leaning towards lower levels. Unless 2762 is taken out, that seems to be the higher probability view. However, 2762 is not the main factor here. Look at the chart below:

  • 5-waves lower off the Feb 27th top
  • 3-wave correction off yesterday’s low
  • Back below 2754 this morning – creating overlap

As of now, 2789 would be the stop-loss that is most legitimate from an Elliott Wave perspective. However, once prices get below 2735’ish and accelerate lower, then use 2762 as the stop.

  • We added to the trade at 2752….average entry of 2747 before the bottom fell out.
  • Revised stops later in the day went to 2722 – then again at 2712
  • Closed out at 2712 – a VERY solid 35 point gain – $1750 per contract

 


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