Have a peaceful night!
Hoofy has pushed through the looking glass (S&P 1015) and the bears have run for cover. The initial pop you saw (on the heels of the breach) was the widespread "buy stops" set by active traders. Now, as the reality show evolves, traders are dumpin' puts like the plague. 15,000 QQQ puts here, 10,000 DIA puts there...put soot!
Ignoring this signal is dangerous, if for no other reason than everyone will be discussing it tomorrow. At the same time, deferring to breakouts (and punting protection) has obvious risk as well. We sensed that this acne needed to take place--there was too much grease in the wheel--now the stakes are raised on both sides of the fence.
The chase is on...and when this occurs, it's difficult to ascertain where it "works" to. In a perfect world, it should follow through tomorrow (as every technician climbs aboard). Throwing caution to the wind, however, please remember that two-sided risks remain as you construct your overnight risk profile. If it were that easy, it would be called 'winning,' not 'trading."
Gotta juggle and tickle....fare ye well into the close.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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