How to Profit After The Worst Trading Day in 2017

Yesterday, markets had their worst day in 2017.

The Dow Jones Industrial Average plunged about 240 points and the S&P 500 dropped 1.2% with financials falling over 2.5%.  I think the selloff was due to concerns about Trump’s policies not having the magical effects the markets are counting on. I also think it had a lot to do with Rep. Kevin Brady’s statement that the border tax has become a “given,” since it would be a disaster if it did pass. (We have only scratched the surface of the retail carnage that will occur if the border tax indeed makes an appearance in the final tax reform plan.) In addition, oil was down pretty sharply yesterday (about 2%), which didn’t help matters.

But the truth is, at these levels any little thing can send the markets reeling like they did on Tuesday.

With stocks extremely overvalued (trading at 22x forward earnings, near the 24x forward earnings they traded at during the Internet Bubble), it won’t take much to see a selloff of 5-10%. The first things investors will sell are the worst stocks, including many of our names. I am confident our long-dated puts will generate good profits because these companies are going to get worse and the bull market is going to falter. That gives us two bites at the apple.

Make no mistake: Yesterday was just the opening salvo. The bull market is coming to a halt, and longer-term, we are still headed for a Super Crash.

When that happens, here’s everything you need to know in order to profit.

3 Responses to “How to Profit After The Worst Trading Day in 2017”

  1. Agree with all the above, but don’t you think the recent news of a FBI probe into Trump and Russia, and the possibility of something real ugly turning up has the markets on edge? – the markets don’t like uncertainty. I watched the overnight Asian/EU markets fall on the news, and then it rippled the next into our markets.

  2. Fast Eddy keeps buying up SHLD like a kid at a candy shop….EL hedge fund and Fairholme own almost 60% of all shares. So whenever the stock drops, they go in and drive the price up, then the shorters go in to cover and drive it up some more. Reality is, at least 2 more EPS reports need to come out before it tanks.

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