>> I admire your patience Chris!
You mean you admire my fear!!! :) What's the sound a chicken makes? Bawk, Bawk, Bawk!!! :)
Was tempted to go for a small put position today, but was thinking things over wed night, and there are two ways i can play this on the short side, (1) anticipate the move and buy when certain criteria are hit, or (2) wait for the downtrend to actually begin.
I've got a first position (it's basically a 1/4 position) at 26. And if the downtrend begins, then i'm ok with just that position, and i can add to it.
David Nichols is recommending to actually wait for the downtrend to assert itself. From today's morning briefing:
One thing I've found is that while this gauze of complacency is still over the eyes of market participants, it's best not to jump the gun on big short positions. Since there was no real jump in the VIX, the market is still in a position to put in another rally attempt, based solely on hope. So we may yet see a few more grinding attempts higher.
But at this point, it's already clear these efforts are going to end tragically for the bulls. Yet we'll stick to our discipline, and only go into Rydex positions when we see that "spark of fear" show up in the VIX. Without evidence of real emotional selling pressure, the market can easily be pushed higher on light volume -- as we've been seeing during the last few rally attempts. So we'll continue to wait, with fingers poised over the "sell" button.
Plus the bulls still have a few things to pin their hopes on. There's a really nice uptrend line off the bottom that has yet to be breached. And the SPX recently closed over the 200 day moving average, which is a measurement that I don't think is very useful, but excites many nonetheless.
Now, in process of waiting for the downtrend to begin (assuming it does begin... don't want to get too confident) let's say we have a breakout. The Nazz and NDX seem to forming triple tops on the hourly graphs. If it breaks out of that triple top, it's going to suck in the technicals folks and probably generate some bullish sentiment. Probably trigger a few buy stops, as shorts try to protect themselves, and longs play the break out. The folks who thought the war was going to create a new bull market will feel vindicated, and may put money to work as well. That's the point the market can deliver some real pain to the longs, once it rolls over. Of course it will deliver a whole lot of pain for us shorts before heading back down again.
Buying at that point will be the money play, and scary as hell, cause it will feel like a new uptrend. |
