Market Pullback Continues

Broader Market Weekly Performance:

Dow -3.50%

S&P -4.30%

Nasdaq -5.25%

Russell -5.42%

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MARKET UPDATE:

Markets were slammed this week with pullbacks of-3.5% to 5.4% across the 4 major indices. JPM loss estimates continued to grow reaching total expected losses of $3-5B for the bank. Credit spreads blew out in Euroland and Greece continues to be a disaster.

BTW, Facebook went public in case you have been sleeping for the last month. However, the market could have really cared less about the $104B IPO. We wont bore you with continued re-hash of the week's headlines and events; we are confident you are sick of hearing it all.

From a market point of view, the S&P sliced though 1320 to close below the 1300 level at 1295. The markets are deeply oversold here and some of our network of trader-friends actually went home long into the weekend anticipating a relief bounce this coming week.

We agree a relief bounce is in the cards. However, we also believe S&P 1250-1260 is in the cards as well; the question is whether the lower S&P level will be reached before the bounce or after. It remains to be seen at this juncture. If markets can find support here it would be encouraging. However, a visit to UNCH on the year (S&P 1258) is expected before all of this volatility is over.

Navigate wisely and stay profitable, my friends. Happy trading!

BOOKINGALPHA UPDATE:

Monthly Trading Service Commentary:

This week we got nabbed by the market's meltdown. Our positions looked fine going into the end of the week despite the multi-day pullback. However, the market continued to decline slicing through important support levels causing us to close the SPX, QQQ, and RUT Bull Put Credit Spreads for losses.

The last minute timing of Thursday's close orders for RUT & QQQ was not preferred but necessary considering the meltdown of the market in the final hour of trading. Some orders were not entered in time and were left to the settlement / expiration process.

Rolling any of the spread positions would not have provided enough downside protection to keep us far enough OTM considering the spike in volatility. This, closing the positions was the most prudent action.

Ultimately, adhering to proper risk management and closing the spreads was the right move as holding the SPX and QQQ would have resulted in disastrous losses. The SPX would have been a total loss if it was held and the QQQ would have been around 60%. Our losses were much smaller than that as we closed the trades before our 35% stop loss threshold was hit in an effort to conserve capital. It was the proper move from a risk management perspective.

The RUT settlement was $753.60, resulting in a $1.40 debit to those holding the RUT spread through Thursday's close. Our closing orders executed around a $3.10 average. Losses for the trade were between 10-29%, depending on execution price or settlement price.

The loss occurred at a bad time (not that any losses are ever at a good time) because we the Monthly Portfolio had reversed losses from early in the year at a quick pace and was heading a very good direction. However, we adhered to proper risk management and closed the trades before our stop loss threshold was hit. Again, it was the proper move from a risk management perspective.

While losses are unfortunate, they are a part of trading. Looking at past trading years you will see drawdowns like this do occur and ultimately, how we prevailed. This is not a justification, merely a reminder that this situation is still within the realm of normal portfolio gyration. While it may be uncomfortable and is surely no fun, my position sizing allows for these drawdowns providing enough capital to recover. See past year's results and let them speak for themselves. For more information please read: Generating Alpha Comes With Volatility

Monthly Trading Service YTD vs S&P 500:

-16.43% YTD BookingAlpha Monthly Advisory

vs.

+2.88% YTD S&P 500

See Trading Record

Weekly Trading Service Commentary:

This week we got nabbed by the market's meltdown. Our position looked fine going into the end of the week despite the multi-day pullback. However, the market continued to decline slicing through important support levels causing us to close the RUT Bull Put Credit Spread for a loss at the end of Thursday's trading.

The last minute timing of the close order was not preferred but necessary considering the meltdown of the market in the final hour of trading. Some orders were not entered in time and were left to the settlement / expiration process.

Rolling the RUT spread would not have provided enough downside protection to keep us far enough OTM considering the spike in volatility. This, closing the position was the most prudent action.

Ultimately, the RUT settlement was $753.60, resulting in a $1.40 debit to those holding the RUT spread through Thursday's close. Our closing orders executed around a $2.00 average. Losses for the trade were between 20-33%, depending on execution price or settlement price.

The loss occurred at a bad time (not that any losses are ever at a good time) because we the Weekly Portfolio had reversed losses from early in the year at a quick pace and was heading a very good direction. However, we adhered to proper risk management and closed the trade before our 35% stop loss threshold was hit in an effort to conserve capital. It was the proper move from a risk management perspective.

While losses are unfortunate, they are a part of trading. Looking at past trading years you will see drawdowns like this do occur and ultimately, how we prevailed. This is not a justification, merely a reminder that this situation is still within the realm of normal portfolio gyration. While it may be uncomfortable and is surely no fun, my position sizing allows for these drawdowns providing enough capital to recover. See past year's results and let them speak for themselves. For more information please read: Generating Alpha Comes With Volatility.

Weekly Trading Service YTD vs S&P 500:

-18.67% YTD BookingAlpha Weekly Advisory Portfolio

vs.

+2.88% YTD S&P 500

See Trading Record

Check out the BookingAlpha Trading Record

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