If You Are Long, Put Your Hedge On

2020-12-23 | Jack Roberts

Let me just start out by saying, do not count out an extended rally into the new year. Bold statement? Honestly? Yes. But this is a bold-ass market with record call buying. You might say, “the Nasdaq chart has less or no structure! It’s unsupported. The PCALL and SKEW indicate I should have hedges on!” Trust me, I’m aware. And you aren’t wrong. It’s just that in times like these, strange things are happening and, in my personal opinion, most of what we have seen this year will continue into next year, too. A big “yay” for volatility. So, let me give you my thoughts on how I see 2021 rolling out.

I think the market goes up, end of blog. Just kidding, but to the point, what if we have just a slight 500 point pullback in the Nasdaq then form a base, and then we salute those who didn’t learn the lesson of 2020, you don’t short this thing. Now, that being said, I know a lot of you are day-traders, in and out in a jiffy, plenty of volatility to go around, which means a whole lot of ups and steep steep downs. Remember the 2nd week of November? Wasn’t that just a “grand time”? No, it wasn’t. I bring it up to say that something like that is what you keep a keen eye out for. I’m talking about the market changing personality on you. If you have been trading for maybe 2+ or 5+ years, you know that this is a thing and, in the options world, you have to adjust a few nuts and bolts, and find the nooks and crannies.

I’m being deadly honest here. My mind keeps telling me to expect a giant pullback, it’s so visceral you can almost feel it. Let me be very clear, I am ignoring this voice. If I owned a giant fund, I would want you to feel it, and I’ve gotta say, they have done a stellar job for a lot of traders that may still be learning. But hey! Now you know what the possibilities are, and even better? You know what the probabilities have shown, which is – take me higher!!! So does TSLA go to $1K next year? Does AMD trade above $100 and form a strong base there? Do semiconductors go parabolic on strong volume again? Ahhhh, as I look forward to another strong rotation into tech, the hourly chart with Squeeze Pro is my guide. My scan for underlyings that are within 10% of 52-week highs is butter as long as I am buying the 8sma, and you know I GOTTA HAVE THAT HOURLY SQUEEZE FIRING ON GOOD VOLUME. Some of my best trades this year have been in unusual volume action buying the hourly squeeze.

For the new trader out there, we are living in a moment in history, so soak it all up. Do not over position yourself. Make a trading plan or at least start one. Don’t do what the “news” is trying to tell you, it’s not like they have your back, right? So, be patient and pounce on clean setups. If you are long, put your hedge on.