BotTrigger Trade Alert: Cancelled Limit Order to Sell our AAPL May $175 puts @ $12. We're going to manually close them out based on the context that develops tomorrow. We may see $15 (200% gain) in value sooner than you think. President Trump's announcement today will *further* spook AAPL & many others that source a significant tranche of their earnings revenue from China. This correction has already been underway, but the news isn't helping a reversal anytime soon.
Strong flush to the downside on nearly everything came in across the board. Notice in the charts herein how quickly that move lower came.
All your superstar generals are getting shot in the face on technical weight of momentum & fear pushing stocks lower due to developing narrative we've been covering for some time now. The tariff regime is real. President Trump is losing support as more of his staff & advisors resign or have been fired. Just today President Trump's lead lawyer, John Dowd, has resigned from the President's personal legal team handling the response to the Russia investigation amid disagreements on strategy
“You see people heading for the doors, you see people looking to figure out how to get out the doors...you don't see a lot of people coming in the doors who are top flight people …people are not eager to come in there…”
Peter Baker - Chief White House Rep for the New York Times
But the big reason why the market especially broke down from a very pronounced bear flag that was forming was the confirmed implementation on tariff aggression.
Donald Trump just uttered the six most important words of 2018 for financial markets: ‘This is the first of many’ with reference to future tariffs. The president is embarking upon a Hoover-esque trade policy in an effort to restore American manufacturing, wage growth, and national security. This particular wave is designed to penalize China for stolen IP; it includes 1,300 product lines that will be published in detail by Robert Lighthizer in two weeks. Lighthizer did say the product lines would be focused on aeronautics, modern rail, new energy vehicles and high-tech products. It was also announced the Trump administration plans to sue the World Trade Organization in order to fight unfair Chinese trade practices. Peter Navarro commented, ‘The United States is defending itself against economic aggression.’
As Trump/Navarro/Ross/Lighthizer/Pompeo/Mattis defend America against economic aggression we’ll continue to position the portfolio for what could become a nasty trade war. We are already short via put options on the SPY, XHB & AAPL...but we're looking to increase our short exposure on the following positions:
5% allocation of QQQ September 2018 $175 puts
5% allocation of BA January 2019 $350 puts
5% allocation of SWKS January 2019 $120 puts
5% allocation of XLF September 2018 $30 puts
Any of our Put Options can be replaced by shorting said stock / ETF in lieu of.
Update on our $AAPL May $175 Puts. They reached as high as $10.65 in value so far, now trading around $9.55. Anyone who wants to close those out can do so with a 91% gain. AAPL tagged as low $168.93 as we noted the gap fill was around the $169 to $167 area. Although that may constitute as a completion of the "retest" & "gap fill" area we highlighted in yesterday's post, we're not convinced that the move down is yet finished. Holding our puts still.