Picture a lifeboat out in the open ocean, and it’s full of Wall Street bankers.
Would you even get in? I got to tell you, I think I’d take my shot in the open water.
This market looks a lot like that boat today. The Dow is beating the S&P and the Nasdaq, and the money is piling into anything that doesn’t innovate: Walmart, the homebuilders, the financials.
I call it the lack-of-innovation rally, and it’s defensive posturing, plain and simple.
Without the semiconductors, you don’t have much in this marketplace.
So when I went on Schwab Network’s Trading 360 this morning, I brought what host Marley Kayden called my three little bears.
The first is a bet against the bond market. Post-election gridlock means spend, spend more, and ask questions later, and I think the bond vigilantes are coming back to town.
The second is a Wall Street giant riding the lifeboat bid. It’s up more than 2% today, and it’s still weak on a relative basis.
And the third one hit an all-time high this morning, a few days after its own earnings punished the stock. It’s hitting highs for all the wrong reasons.
All three are put spreads, so I know my worst case before I’m in. Two of them run all the way to January, because this isn’t a short-term call. I need the next couple of months for the market to catch up with this.
Watch me build all three trades, strikes and expirations included
To your success,
Don Kaufman
P.S. Get your popcorn ready because tomorrow is gonna be popping. Here are the details.
