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I think anyone who tells you they “know” where stocks are going next week is either smoking something (and I’d like some, please) or is looking to sell you something.

In the last two weeks we’ve seen a market that was totally willing to look past all the evidence that coronavirus cases were surging and that the re-opening economy was at risk to one that, today, is worried, worried, worried about a set back to growth.

And this is a market that is perfectly willing to decide that nothing fundamental about the economy or on Main Street matters as long as the Federal Reserve is pumping cash into the financial markets.

My own belief is that we’re in for a period when Wall Street decides to focus on the pandemic, the possible collapse of the hospital system in states such as Arizona and Texas, and the re-imposition of restrictions on economic activity that are annoying enough to slow down business activity but not meaningful enough to slow the surge in coronavirus hospitalizations.

Would I put  whole lot of money on that belief?


Which is why I’m positioned in my own portfolios and in the aggregate in these online portfolios

to take advantage of any reversal of sentiment and a renewal of the rally. I will continue to hold the very solid growth companies that I’ve been adding to these portfolios recently. Stocks like Twilio (TWLO), and Veeva Systems (VEEV), and Palo Alto Systems (PANW), and Xylem (XYL) that have done well in the rally and that, on the evidence of today’s action, look like they’ll hold up relatively well in any moderate selling.

to use the Put Options that you’ll find in my Volatility Portfolio on my subscription sites ($199 a year) or ($79 a year) to make money on any move to the downside. I made money today on my Puts on Wells Fargo (WFC) and Six Flags (SIX), for example. I wouldn’t be adding more Puts here because most of the obvious Put candidates are now down significantly. At $18 American Airlines (AAL) was a very attractive Put. At today’s close of $12.38, the easy money has been made on the drop. And I don’t want to further add Puts if the rally is about resume. (As I said, who knows.)

to pile up a little cash on the sideline by selling the riskiest stocks on the long side (hence my sell of Salesforce (CRM)) today and by selling some Puts on the short side that show solid profits and where the risk of betting on a further decline has started to mount. I’ll hold this cash on the sideline until I see evidence of a long-term trend–you know one of those things that runs for two or three weeks–or some bargains or whatever. (Speaking of which, I’ll be posting another updated Dip-O-Meter to track bargains that now again look possible. If…)