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Short Position Taken on the $SPY

BotTrigger Trade Alert: $SPY June 2018 $290 Puts Bought @ $23.50 for a 2% starting position. We will wait for a SPY bounce to add more to this position as momentum has shifted to the downside.

Last week we sold & reduced many of our bullish positions such as our QQQ calls at sizeable gains as we expected market weakness to materialized to the downside. We've gotten a "nearterm" breakdown as the indices begin to breakdown. This is by no means the end of the bull market, but rather the start a near to intermediate term correction in the broader markets.

There’s a new rainmaker in town. His name is Jay Powell. Isn’t it interesting we don’t know anything about our new Chairman of the Federal Reserve and yet he immediately becomes the most powerful person in global finance? It’s very important to get a handle on Powell asap. Here’s a few tidbits we’ve been able to dig up...He’s a Washington insider who has worked at both the Treasury and Fed . He worked at the Carlyle Group that has a reputation of being the best connected private equity firm in the world. Carlyle was founded in 1987 to invest alongside Washington DC’s political agenda. The firm has been linked to all sorts of conspiracy theories among 9/11, Bin Laden, and the Bush family. Powell served as the Assistant Secretary of the Treasury under President George H. Bush and then Powell followed Bush to Carlyle from 1997 to 2005. President Obama appointed Powell as a Fed governor in 2012. Colleagues such as Richard Fisher describe him as unassuming, not a self promoter, and one who likes to do the unglamorous jobs. ‘Despite his wealth, friends and former colleagues of Powell's describe him as “annoyingly normal.” He lives in Chevy Chase, Md., and often rides his bike about eight miles from home to the Fed. He doesn't drink much, plays golf and the guitar, and has an odd ability to repeat people's sentences backward to them, a quirk former colleagues say is a reminder of his smarts — and how closely he listens…“This is a guy who does his homework,” says Grumet. “In the three years we worked together, there was only one thing he ever asked for: Larger binders.” Powell has a reputation for carrying around huge binders to meetings full of all his prep materials.’

In her exit interview this morning, Janet Yellen mentioned concern about high valuations in the stock market and in real estate. Yellen’s legacy will be remembered as a time when the Fed began to raise interest rates and reduce the size of the balance sheet while maintaining a stock market rally. Two years of unprecedented low volatility served to inflate the stock market bubble. As Powell takes over, it’s interesting to note that he appears willing to direct the plunge protection team not to intervene. As the plunge protection team steps aside since last Monday January 29th, we have witnessed 5 days of triple digit intraday reversals to the downside. This kind of follow through seems to confirm that new market behaviors are being introduced by Jay Powell. What would I do if I was the new Fed Chairman? My first move would be to orchestrate an orderly correction in order to deflate the bubble. Bubble’s are unsustainable. The bursting of bubble’s causes severe collateral damage. If Powell doesn’t care about ‘self promotion’ and truly is a chairman who ‘likes to do the unglamorous jobs’ then he is an ideal candidate to deflate this trifecta of stock, bond and real estate. It’s amazing how much power is concentrated at the Fed and Treasury. The transition from Yellen to Powell is the new market moving variable.

Today we are purchasing a 2% allocation of $SPY June 2018 $290 puts with its price drop below $270. This is a starting position that we intend to build up on the next bounce higher. We are also raising the momentum sell point for the 20% allocation of $USO calls from $12 to $12.60 in order to protect profits as volatility returns to markets.

Some of the greatest pearls shared by Jesse Livermore:

“Money is made by sitting, not trading.”

“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.”

“Buy right, sit tight.”

“Nobody can catch all the fluctuations.”

“There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. Not many can always have adequate reasons for buying and selling stocks daily – or sufficient knowledge to make his play an intelligent play.”

“It takes time to make money.”

“Don’t give me timing, give me time.”

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