The much anticipated summit between President Trump and President Xi came and went without incident, though Trump did order an airstrike against Syria before his dinner with the Chinese head of state. Contrary to his persistently tough rhetoric against China and prediction for a “difficult” meeting, Trump came out of the summit declaring that he’s developing an “outstanding” relationship with Xi.

At the end of the day, there were no diplomatic gaffes or confrontations, nor was there any meaningful agreement on trade, currency, North Korea, or any other significant issues, beyond the perfunctory promise to keep dialogue open.

The airstrike did help boost oil prices, but the stock market itself remained fairly calm. If it’s truly a one-off retaliation for the use of chemical weapons, then the market reaction is justified, but it’s not inconceivable that the move may open up a can of worms.

With the market overbought and plenty of political and economic uncertainty around, we think it prudent to maintain a hedge against market downturn.

Yesterday, our stock indicator turned neutral and we sold to close the SPDR S&P 500 ETF (SPY) June 235 put. Today, the indicator has actually become very slightly bearish again. Although we aren’t treating our other put against the S&P—the SPY June 220 put—as an indicator-driven trade, we still have it as an ongoing hedge against this overbought market.

The trade was a 21.5 percent loser for us. Although the underlying market did decline during our holding period for the SPY June 235 put, the erosion of time value led to the loss.

We debated whether to close the position since we believe the market is significantly overbought. But ultimately, as we have had very good success following our indicators, we stayed discipline and stuck to our strategy. If the stock indicator moves deeper into bearish territory, we can always reopen another put against the market.

Our current indicator readings are listed in the table below. The gold stock indicator has moved into “-1” territory, and as noted above the stock indicator is on the border between neutral and very slightly bearish. Everything else now flashes neutral signals.
 

Besides the options, we currently hold open (long) positions in the following stocks: NovaGold (NG), Gabriel Resources (GBRRF), Schlumberger (SLB) and Trilogy Metals (TMQ).