Monday, January 4, 2016

Jan 4 - Cashed 3/4 SPY shorts

Sold 3/4 of SPY puts and will reposition on a bounce/ consolidation in next few days.  I will also reenter short if the close is heading towards major weakness but I am will to give up some range to protect gains made in last few days.  We could end up going straight down to the 190 level in SPY but something about the oversized gap down makes me think the market could be bringing pain to the bears also.

Regardless of next short term move, the market is increasingly looking more volatile for this year.

This is a huge gap down and out of proportion.  We could see an extremely strong reaction tomorrow to the upside and less likely another big gap down which would probably be a huge move.  If that happens, I will be pretty disappointed holding only a 1/4 position but unless we definitely clear under support with a weak close, this big gap down could act like a vacuum if the market bounces into it.

Very oversold and well under the lower BB so am being cautious about the short.  I would have preferred less of a gap down and more intraday movement.

There is a still a long way to go on the stoch/ CCI which means this move is probably not over.  That said, the oversized gap down with the intraday weakness in $VIX/ $VXO could foretell a reaction tomorrow

VIX's move seems a bit extreme
 Near the upper BB but there is a lot of room for the indicators to go up (CCI, stochs)
 I really don't like this reversal candle in $VXO and the big gap up.
 New trend may be starting as we have fallen out of consolidation on strong volume.

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