Welcome

Welcome all who subscribed yesterday. This is the first post in the newsletter. I’ll start by talking about where I see the market at. Based on the current analysis, SPY is still in a downtrend (intermediate term). Intermediate term is on the order of 3-4 weeks.

It will enter an uptrend mode when SPY closes above 406.25. Till then it’s best to be out of SPY for the intermediate term. If you already have positions in the market (i.e. hold stocks, etc), might be a good opportunity to buy an Apr’21 406 put (i.e. a put at 406 expiring Apr’21). As of now the put can be purchased for 10.39 which would be an outlay of $1,039. This would protect 100 shares of SPY on the downside.

Consider this to be a cheap insurance against SPY continuing its downtrend. If we do get a close of SPY above 406.25, then you can sell the put for a small loss, but you’ll have the peace of mind that your portfolio is protected.

If you’re looking to enter into a position, right now might be a good time to buy the EFA (iShares MSCI EAFE ETF) which seems to be starting a new uptrend. Currently the ETF can be bought for ~$70.58 per share. The stop loss point would be if EFA closes below 69.30. (~$1.28 risk per share)

To get peace of mind, instead of buying 100 shares of EFA, you could buy an Apr’21, 69 call for ~2.75 or $275.

Those are some of the plays for today. We’ll keep tracking EFA as its price evolves.

Disclosure: I’m long EFA in my personal portfolio.