5:00pm (EST)
Quick note for our current subscribers…
We have updated our 2010 portfolio in the Members Area today.
We have received lots of emails over the last few days as many of you are nervous of a pending market correction. The Dow lost another 216 points on Friday to finish at 10,172 as the selling pressure continued into the closing bell.
The Dow reached a high 10,763 on Tuesday and the 600 point drop from the high has meant a 5% correction. Are we nervous? Not at all.
In fact a week ago we had this to say:
“We have mentioned our targets for the indexes and from our camp it looks like the market is nearing a top which makes it harder to trade. It’s possible we rally for a few more weeks but once we get to February we think there’s a chance of a 5%-10% pullback.” (END)
Well, we got the 5% decline and next week we may get the other 5% decline.
As we enjoy the weekend, Dow futures are down 187; S&P 500 futures are lower by 20 while the Nasdaq futures are off by 43. Folks, if these figures hold up then we could have a major sell-off on Monday.
We have protected our portfolio by going way out in our call options and we have a current put option open that could do very well if the market does continue lower.
A lot of investors get nervous when the markets tanks or starts to correct but we love it. We’re like a chameleon, we change colors. Folks, if the market is in correction mode then you can make just as much money on the downside as you can on the way up. We still expect some kind of bounce but that may not come until the bears are done pushing.
For instance, we talked about the weakness in Goldman Sachs (GS, $154.12, down $6.75) on Thursday and Friday it dropped another $3 from our 1pm update. Some options traders did well buying Goldman put options. The February 150 puts (GPYNJ, $4.59, up $2.44) jumped over 110% on Friday.
We show you this stuff because you can make just as much with put options as you can call options. So, if the market is going to tank, don’t be nervous. The opportunity the volatility is providing right now is incredible.
There will be a ton of action next week and we will be back Sunday night with a full review of what to expect in the Weekly Wrap. Also, don’t forget to check out our money management video if you haven’t seen it yet.
If you want to see some of the returns you can make in a down market, check out our 2008 portfolio which can be downloaded as a PDF file. For those of you who don’t follow the market, we had a major correction from the summer of 2008 through March 2009. The bull market has been intact since then but the bears are waking up…