Yesterday's early post, The View From The Long Term ended this way:
Given the conflicting views in play both long and short term, the best play seems to be to let it unfold without placing big bets.
Shortly afterwards, the market "unfolded" quite a bit and then continued to do so in the overnight session. Early in the morning EST, it bounced off 1320. We now have a 23 point decline with which to gage the current market structure.
This morning I took off some SDS in the pre market. I had squared up against it during Friday afternoon's dip to 1337 using SPY 135 calls which I will have to sell at a loss on any bounce today.
The key thing here is that the loss is very small because I was using options. Had I been buying dips with futures or leveraged ETFs, I'd be very upset. Not so with $.45 options.
I will be watching the cash S&P very closely today. Yes it is an impressive decline, but as I've said before, there should be little doubt if it's the real one. Only then will I place the big bets.
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