Yesterday, in after-hours trading the SPY traded down to 264.3. Just moments ago, the SPY traded to 263.68. 

I’m no technician, or anything else for that matter but that seems pretty close. It looks like it’s moving back above 264 as I type this at 11:30 Eastern.  

Before I go any further, please note that NOTHING I write here is to be construed as financial advice, before you make any financial decisions you should consult with your financial adviser. You’re a big kid, act like it.  

That being said, I am going to BTMFD, which if you don’t know means “buy the motherf**king dip”. 

Sure, it feels horrible and the wrong thing to do. The VXX has spiked 10% and the UVXY has spiked 20% or more.  

But on the other had consider the following names, all have reported earnings and there seemed to be no apocalypse in their balance sheets. Hell, even Mr Wonderful loved the first one: 

  • BA – down 1.82% 
  • BABA – down 2.34% 
  • FB – down 1.6% 
  • JPM – down 1.67% 
  • NFLX – down 1.85% 
  • SCHW – down 2.4% 

All of these names were down more when the SPY hit that intraday low. Why? Who knows. I think it’s ‘just cuz’. 

Tony Dwyer was on Fast Money at noon and in the afternoon several times over the last few weeks. He argued, every time, that stocks should perform well this year. But just within the last two weeks he thought we would have a pull back because there were no bears, that the sentiment had gotten extended. He argued that when that pull back occurs, one should buy that dip. If I remember he said ‘with both hands’. You can see a tweet from him here.

While I’m not gonna go in with both hands, I am going to get a bit longer at these levels and I’m going to do it with call spreads. 

Just now I bought the July expiration 280 calls for $4.60 and sold the July expiration 289 calls at $2.1 so it cost me $2.5. I can make $9 on each of these contract pairs. I sold the 289 calls instead of the 290 calls as I can buy the 290s as part of a calendar spread in the future. 

Could be wrong, but will pay off at more than 3:1 if I’m right . . . .  

Good Luck today!