April 12, 2022

Rinse and Repeat

The Nasdaq gapped down and continued going down over 1.5% on Monday with a shortened week ahead.  The tech sector is continually being hit as rising interest rates and the fear of an aggressive Fed make the rounds.  The SP500 and Nasdaq 100 are falling to 3-week lows.  


China stocks tumbled on a concern of a surge in Covid infections and more lockdowns and fear of extended lockdowns that have the potential to further disrupt the supply chain.


Even crude prices are headed to a new multi-week low, making the Energy sector start the week in the red.  


Times like these might leave with the question of what to do.  While the market gyrates through the news of the day, there is a group of investors that have been focusing on a bullpen of 10 stocks that have high dividend yields and use certain option tactics to maximize their returns.  The Triple Play Income service at Traders Reserve has been investing in companies that combined have an annual dividend yield of 4.92% and an average total cash return of 33.3% since January 1, 2022. 


Dave walks you through about 2-3 trade recommendations per week where he builds a portfolio and teaches you about capital allocation.  These techniques work in all different market environments and can issue premiums each week.  One stock in his bullpen returned 28.5% in premium in 2021, and 3.8% in dividends all while the stock moved sideways.  The total return on that position in 2021 was 28.3% and that was just one of the stocks in the portfolio. 


There’s nothing wrong with a little rinse and repeat, as long as you’re doing it the right way.  The Triple Play Income way.




When the markets sell-off, I like to look to see if any sectors had a positive (or near positive) day and then see which stocks might be bucking the overall market trend.  


Loews Corporation (L) is in the financial sector, which was slightly down on Monday, but the stock rose by nearly 0.5%.  It’s heading up into resistance, but a fresh cross of the 3 and 8 period moving average is showing this stock might have some room to run to the upside, especially if the banks reporting earnings have a good week this week, pushing the entire financial sector higher.

Loews Corporation (L)



Industrials were the only sector that essentially stayed flat on Monday, while the rest of the sectors had another day of selling.  With some of the large-name banks reporting earnings this week, our eyes will be paying attention to the Financial sector.


If you want to hedge your portfolio, but are not comfortable with, or unable to, sell stocks short, you can buy inverse ETFs.  An inverse ETF is an exchange-traded fund that is meant to profit from the decline in the value of the underlying asset.  Inverse ETFs are meant to be short-term trades. 

Inverse ETFs can focus on the broader market, like the Russell 2000, Nasdaq 100, or even the SP500.  They have inverse ETFs on specific sectors too.

For example, the ProShares Short SP500 (SH) is an inverse ETF that tracks midsize to large companies in the SP500 and the ETF will gain when the tracked stocks lose value.  If we look at SH from April 1st of this year, it opened at $14.03 and is currently trading around $14.47.  In the last 11 days, it’s up slightly over 3%.  

Now let’s look at the SP500, more specifically let’s look at ticker SPY, during the same time period.  The SPY opened at $453.31 and is currently trading at $439.72, or roughly a decline of 3%.  Adding an inverse ETF to your portfolio is a great way to hedge against downward moves, but you have to focus on portfolio management, which we will get to later this week.
 If you have any questions, comments, or anything we can help with, reach us at any time.
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