Almanac Trader Alert – June Post Expiration Proceeds Just As Expected

In our Witches’ Brew in June, we noted that the Monday after quad-witching day in June has a bearish tone. Specifically, we found that since 1990, Dow declined 71% of times on Monday after June expiration, S&P 500 58% of times, NASDAQ 67% of times and Russell 2000 71% of times.

The 2014 was not much different. On Monday after quad-witching Friday, Dow, S&P 500 and Russell 2000 declined but NASDAQ was barely up. Overall, the week after June expiration week has been down 21 times in last 25 years. Yesterday, June 24th, market action tells us that this trend has a greater chance of continuing.

However, many of our ETF trades have given exit signals. All of them have produced profits. It is highly likely that if we hang on to them then the profit will increase in the next couple of days. In today’s US morning session, the futures are lower and it is very probable that today will be a down day. So it is up to you to either close the trades now or monitor them closely and then close in next few days.

  • TWM, ProShares Ultra Short Russell 2000, exit is @ 44.52 with a gain of 0.3% in five days for an annualized return of 20%
  • REW, ProShares Ultra Short Technology, exit is 17.52 for a gain 0.9% in five days giving the annualized return of 63%
  • Exit SDS, ProShares Ultra Short S&P 500, at 25.72 for a gain of 0.7% in four days resulting in an annualized return of 61%
  • Exit QID, ProShares Ultra Short QQQ, at 51.32 for a gain of 0.2% in four days, the annualized return is 14%
  • Exit SMN, ProShares Ultra Short Basic Materials, at 28.77 for a gain of 1.7% in two days or the annualized return of 310%
  • Exit SIJ, ProShares Ultra Short Industrials, at 47.71 for a gain of 2.0% in two days or the annualized return of 359%
  • Exit SKF, ProShares Ultra Short Financials, at 15.60 for a gain of 1.2% in two days or the annualized return of 213%
  • Exit DXD, ProShares Ultra Short Dow 30, at 25.59 for a gain of 1.2% in two days or the annualized return of 290%

If you do not exit the trades now then you may look at the support-resistance to determine the exit. The market is in a strong uptrend and our strategy is in contrarian in nature hence it is prudent to hold onto these trades for a short time. Specifically you may consider following levels:

  • SDS the profit level could be below 26.40 and the stop loss at 25.50
  •  For DXD, the profit level is below 25.96 and the stop loss is at 25.12
  • For TWM, the profit level is below 45.89 and the stop loss at 43.81
  • SMN has the profit level below 29.73 and the stop loss at 28.77
  • SKF may make a double bottom in that case the profit potential increases. The next resistance for it is at 16.03. The DB target is near 16.70. The stop loss is near 15.40

DXD_140625 SDS_140625 SKF_140625 SMN_140625 TWM_140625

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