The "September slide" this week has been excellent for my paid-up subscribers - even some positions that had been sluggish moved higher - because we were well prepared for stocks to gap lower.
We closed out two more winners in Western Digital Corp. (Nasdaq: WDC) puts, and on the "other side" of the market, DSW Inc. (NYSE: DSW) calls for a nice 174% and 78% in gains.
Those results certainly show how our proven "Best in Breed" (BIB) stock-picking methodology works hand in hand with portfolio balance. A mix of calls, puts, bullishness, and bearishness has helped us capitalize on the market's recent swings.
Right now, BIB is showing retailers as an area of strength for the next couple of months, which is why I've been so bullish on them here in Money Morning recently - just look at our DSW position.
Meanwhile, BIB bull's-eyed the technology sector as a laggard, and sure enough, it's no longer leading the market higher. Puts in WDC yielded a huge profit. And our other bearish plays in the sector are bouncing back in our favor.
Now let's take a look at what the market's showing us for the next four weeks or so...
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The end of summer is getting off to its "traditional" start as the broad-market indexes are rolling over from their recent all-time highs. The S&P 500, for example, was rejected at 2,900 just after it hit an "Oversold" reading following the most recent in a series of record highs last week.
Look, being technically oversold is a simple explanation for the short-term weakness we're seeing...
But I've got deeper concerns that we might see September and October once again raining on a bull parade:
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For all that, it's way too early to say we're headed for a correction.
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After all, the market has endured similar kinds of pullbacks within just the past couple of months, and they ultimately reversed into new highs.
To tell whether "this time is different," I'm closely watching the following levels:
The bottom line is that a bearish bias - puts and short positions - should see you clean up this month and very likely into October.
That's what I'm recommending for my paid-up subscribers, too. Plus, I'm adding more puts to the portfolio. In addition, it's a smart move to close out winning put or short positions as soon as you're happy with the profits, as any positive news could cause the market to experience swift upside volatility.
He's on pace to see 3,390% total winning gains this year.
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About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.