Monday and Thursday of this past week I bought back some of the TNA that I had profitably sold the day prior to the Fed meeting announcement. Not all of it, but some of it and I still hold it. I also still have the long July 58 TNA calls I bought on 5/16, the long July 60 TNA calls I bought on 6/1 and the long October 75 TNA calls I bought on 6/20.
I am positioned to benefit from a continued move higher on $RUT. Though I would benefit more from a move lower in $RUT and a move higher in $VIX. Given the choice I would gladly forego the smaller profits available to me being long TNA and long a legacy URTY position (which I am almost completely out of)…and AGQ and UCO (more on that later)…in favor of the larger profits that I would make on my long TZA, TVIX and UVXY positions. To that end, a Monday trend day lower below $RUT 780 (ie, a bull trap) would be welcomed. A very low probability event I must admit. A more likely event would be sideways to slightly down action on Monday and Tuesday of this coming week. Then an $RUT close in the 780’s on Thursday followed by a Friday morning gap down open below $RUT 770 and trend day lower on a baaad (sic) jobs report with follow through to the downside the next Monday would put into place a pretty solid island top. This would trap a whole bunch of longs and really get the party started to the downside. My heart tells me that $RUT/$VIX should be lower/higher. My head tells me the $20B = 1% thesis is correct and $RUT/$VIX will continue to move higher/lower.
I’m back in the black on the long AGQ shares I bought on 5/16. I need $WTIC to get back to about $90 to get to break even on the long UCO shares I bought the last 2 weeks of May. I would love nothing more than to wake up one day this week to the news that Israel has bombed Iran and $WTIC has spiked to $200 as a result. An oil spike of that magnitude would also kill the equity markets and make $VIX act like it has mainlined an uncut kilo of gorilla cocaine.
For the time being I plan to hold what I’ve got. I will resume my scale-in campaign on TZA and UVXY should we get evidence next week that Friday’s move was only a bull trap. If not, I will suspend said campaign until Autumn.
