Right or wrong, it's a worthy spec!
Fare you well my honey
Fare you well my only true one
All the birds that were singing
Have flown except you alone
Well, my friends, I couldn't resist one more missive from the home front. Rest easy--I'm practicing what I preach and I'll be taking the first flight tomorrow to have a couple of libations with my Valentine, Dorothy. Before I go, however, I wanted to share some observations that, while late, I hope will (still) add value.
We had a light volume rally right to our resistance levels, Powell said this will take weeks (not days), there's potential terror (bearish) and terror jitters (bullish), the near term oversold condition has been alleviated and I'm already seeing seeds of hope (size buyer of SPY on the close). As I said earlier, there is gap risk higher--but my "gut" is that today's action is more bearish than bullish.
Despite my upside zag yesterday and today, part of my OY! was that our historical measures never got to extremes (on the downside). Is this a necessary precursor to a rally? Not necessarily--the fact that everybody's watching them could very well be why they haven't "confirmed." Still, with the world as it is, the October lows as suspect as they are and none of the trading metrics offering clear (upside) direction, there remains tangible downside risk.
In the interest of offering a (requested) real time example, I wanted to quickly walk through a small schnitzel I set up. After the bell, as soon as these thoughts crystallized, I bought 100 lot of the S&P February 830 puts at 10.35. This is what's affectionately known trading circles as a "punt."
In addition to the above stated reasoning, I felt the potential scenarios warranted the defined risk. If we go to war over the weekend (without U.N support), I think that's very bearish. If nothing happens and we gap higher, we'll likely retest the upper end of the trend channel (on the downside) before (potentially) rallying (and I'll have a chance to cut my losses).
Anyway, I just wanted to share these thoughts before I (officially) turn it off and tune it up. The game continues to wear on us all and if we don't find a balance, we're only hurting ourselves (in more ways than one). Take it easy, my friends, and use this time to etch some good memories in your mind. When the closing bell tolls from above, those are what we'll remember most.
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