My previous post did indeed help put things into perspective. I believe it's likely there will be a retest of the October lows in the coming months whether it's due to Europe or other reasons. But I also believe that until the chronic hedging stops (i.e the high put/call ratio), it's not worth making a bet on that outcome. Today's action doesn't change my opinion on this. High put/call ratios like we've been seeing doesn't guarantee there will be no major downside by any means.... nothing in this game is guaranteed....it's all about probabilities and risk/reward. It's just that in my experience, when you're in an uptrend as strong as the one we've been in since October, bear market rally or not, it usually doesn't end untill you see complacency in the options data i.e. low put/call ratios and a VIX in the low 20s. If that doesn't turn out the be case this time, fair enough. I'll have no regrets if I miss out profiting from the downside because I didn't see what I needed to see to pull the trigger. Nor will I have been burned playing the game of chicken long side. Despite the severity of today's decline it doesn't really look too bad when you look at the chart now does it? The uptrend is still in tact and we could simply be consolidating before another push higher. But what today's decline does tell you is that the market is still headline driven and it's still broken. Bull markets don't behave like this.
Look people, this market is dangerous for all players on either side of the market and I've been saying that for quite some time now. The only way to have captured today's downside was if you made a bearish bet before yesterday's close gambling that the after hours headlines would be negative. It could have just as well went the other way. The same thing goes for the upside. Most of the upside has been done via gap ups due to favorable headlines. The market is therefore forcing you to gamble at the end of the trading day to capture the big moves the following day. You typically either get instantly rewarded or your nuts chopped off the next morning via the gap. That's not much different that going to a roulette table and betting on red or black. I know not everyday has been like that but a lot of them have been and that's not my kind of market. I know I said I need to be more flexible but I'm not going to play a game that forces me to gamble in a casino-like way....sorry. I'll just remain in cash until things settle down or I see a really good ST edge. You know what? When I first started trading full time in December 2008 it was the same. The market was crazy volatile and I although I was somewhat sure there would be a retest of the November 2008 lows, I couldn't bring myself to bet on it because the market was too nuts and there was too many cross currents and not enough edges. I ended up making very few trades until the summer of 2009.
Don't force it. Wait for your pitch. You don't have to trade every day, week or even month for that matter. The market is not going away.
Remember Lester? Here's what he posted last night....no wonder the market is tanking lol!
I fucking give up. I closed my two remaining IWM Puts near the close today. They were Dec 66s and sold for 0.98 after paying 1.35 last week. So this leaves me $200 from the $4000 that I started with in mid-August. I have taken that $200 and bought a SPY Dec quarterly 133 Call for 1.84. This will give me the whole month of Dec to catch the Santa rally.
This guy is gold I tell you!
I fucking give up. I closed my two remaining IWM Puts near the close today. They were Dec 66s and sold for 0.98 after paying 1.35 last week. So this leaves me $200 from the $4000 that I started with in mid-August. I have taken that $200 and bought a SPY Dec quarterly 133 Call for 1.84. This will give me the whole month of Dec to catch the Santa rally.
This guy is gold I tell you!
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