Peter's Watch List March 31st

Good Morning,

The market has been on a pretty good multi day run here, but if you step back and really analyze this, it may not be as good as it seems. First, we need to consider that bear market rallies tend to be fast, strong, and go higher than expected. Sounds a lot like what we are seeing right now - right? The other very important thing to consider is that we are into quarter'd end today, and that is leading to some rebalancing by mutual funds. What does that mean? It means that many funds are forced buyers of stocks here to keep their stock/bond ratio in line with the fund prospectus. So for example if a fund is 50/50 stocks and bonds, and stock prices have dropped dramatically while bond prices have gone up, they have to buy more stocks to keep that 50/50 balance. So we run the risk that this rally has been fueled but forced buying that wont continue after today. Taking this into consideration, I am more interested in looking at some trades to the short side as some of the heavily traded names that these funds have been buying meet resistance. I will be watching AAPL, FB, ROKU, and NFLX for potential short setups today if things play out like I expect.


Yesterday I took a story stock swing trade in $VIX calls. The thesis here is that we will see another big spike in the VIX before volatility hopefully really starts to ease a bit. Hopefully when that happens we can get more aggressive about alerting more trades, but in the meantime lets see if we can't profit off of another spike in volatility if it happens.

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