Getting Lopsided In The Red Zone

Yesterday the market had higher numbers in mind than just the gap at 1353.39. It hit and bounced off the 61.8% retracement level a full 10 points higher. Notice that while it bounced off the 61.8% level, it also closed on top of the trend line.

The S&P can crater quite merrily from here.  Barring a breakdown however, the next area of interest to me is the confluence of the 78.6% retracement and the 1:1 Fibonacci expansion target which both target 1380.

Notice 1380 also coincides with a rising trend line drawn from previous lows.

The S&P can back fill all it wants, but below 1306.62 still means big trouble longer term. For now price action is steadily creating lopsided sentiment as mentioned here and on Twitter yesterday, while volume and other internals subtly diverge. As of yesterday's close, over 87% of the S&P was trading above its 20-day MA. That's in the red zone.

I acted on this condition not with SPY puts this time (still holding some 134s badly underwater, having only hedged them once) but with VIX July 24 calls.