A Wonderful Day, Selling TZA and VXX

Today was a wonderful day for those prudently positioned!

Including additional selling in after-market trading the DJIA gave up over 1000 points of its still-insane valuation today, which is nearly 4%.

That alone is enough to destroy some entire portfolios due to the extreme leverage being employed, which we've warned of repeatedly.

The DJIA is only back to where it was two months ago, and has a very long way to go before unwinding the massive margin debt, fundamental hypervaluation and bullish hubris still totally evident.

Stocks are becoming slightly oversold on a short term basis, but in the intermediate and longer term are still extremely overvalued.

Today is just a very small "blip" in the longer term.

Click to enlarge, via pop-up in a new browser tab:

Per past posts, we have an unprecedented five positions each in VXX and TZA.

If stocks are down again early tomorrow, thus if these levered inverse positions are up again early tomorrow, we'll sell the most recent purchases of VXX and TZA.

At the close today these were up 19% and 21% respectively in just two weeks.

We'd like to book at least that much or more tomorrow on these positions, otherwise we'll hold for the time being.

If markets are down materially, we may sell other levered short positions and if so will update the blog as quickly as we can.

If the DJIA is down again, a bounce is likely to begin around the 25200 level.  

That corresponds to its 200-day moving average.

Yes, market drops often end in October.

If so too this time, we must ask which October?  

Don't simply presume it'll be 2018.



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