NASDAQ Experiences Historic Rally Amid Uncertain Market Conditions
A Record-Breaking Day for the NASDAQ
According to ZaStocks on X, the recent surge represents the second-largest single-day increase in NASDAQ’s history. Notably, the previous two incidents occurred during bear markets.
The first event on January 3, 2001, took place during the bear market triggered by the dot-com bubble burst. This bear market persisted until it reached its lowest point on October 9, 2002.
The third major rally occurred on October 13, 2008, amidst the Global Financial Crisis, which only bottomed out by March 9, 2009.
Investors who rushed back into the market following these significant rallies often found themselves facing substantial losses in subsequent months.
Our Strategic Moves
In light of this rally, we chose to increase our short exposure, particularly targeting Apple, Inc. AAPL.
Questioning the rationale behind a more than 15% spike in Apple’s stock due to President Trump’s announcement of a 90-day tariff pause, we noted that 90% of Apple’s products are still manufactured in China. This rally appeared irrational, leading us to fade it.
We also explored a couple of bullish strategies that became appealing because of the liquidity drought resulting from the unwinding of the basis trade.
One was a call spread on the iShares 20+ Year Treasury Bond ETF TLT, while the other involved a calendar spread on Chevron Corporation CVX.
Moving Forward
We consistently advise leveraging market rallies to hedge your positions, and we encourage you to consider this strategy.
For added support, you can download the Portfolio Armor optimal hedging app by scanning the QR code below (or by tapping here if you’re viewing this on your phone). This app assists you in identifying the most economical hedging options based on your risk tolerance and investment timeline.
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