Graham Walker

Will seasonality and cyclical tendencies bail the market out as we head into two of the stronger months of the year? UPDATE: On October 15, I added the $SPY short to our portfolio in anticipation of a general market decline. At the time, the position was initiated as a hedge against our long exposure. Since then, the market declined, with the $QQQ falling 11% and the $SPY declining 5% from our entry price (short). That weakness stopped us out of all but one of our long positions ($TEVA) - either at small losses or with profits on stocks where we had backstopped gains. By default, as our long exposure came down, the $SPY short transitioned from being a hedge to leaving us net short the market. We view the recent action as a stealth bear market in certain areas, where the major indexes have masked significant deterioration beneath the surface, particularly among AI infrastructure and technology stocks. Many of those names have suffered substantial declines from their highs, driving them to oversold levels. My original stop on the $SPY was 778.00, which represented a new all-time high only about 1% above our short price. I have now improved that stop to our breakeven price of 769.64, eliminating stop-loss risk on the position. The trade has already been a success from a risk/reward standpoint. We initially risked approximately 1%, while the $SPY declined roughly 5% from our entry—about a 5R move. Our decision to hold for a potentially larger move was based first on the position serving as a hedge and, subsequently, on our ability to de-risk the trade to the point where we now have zero principal risk. This is a classic way I approach many of my market/ETF trades when shorting the general market. minervini.com minerviniprivateaccess.com