Sometimes you just get lucky. I can't think of a better headline for options expiration. This is exactly what I want to see after the debut of the new Fed chairman-to-be yesterday who confirmed that she's basically . . . well, nuts.
Yellen is a congenial, kind-sounding person, just like Ben. But she truly believes in monetary tinkering and Keynesian madness . . . and keeping the pedal to the metal.
So as cool and contrarian as that headline is, get ready for a possible melt up.
Unless the market breaks a lower swing point, and I mean a major one like 1560.33, this market is showing signs that it may want to blow off.
The oscillations are getting smaller and smaller. The amplitude between highs and lows is shrinking. As shown by John Hussman and others, we could get a near-parabolic end to the madness.
What could that mean? Starting thinking in gross levels: 1800, 1850, 1900, 2000. All are possible until a breakdown comes.
Of course, I see no indication of this across a variety of internal indicators, but there are times when markets take on a life of their own; they run on their own psychology. Now could be one of those times.
I buy every dip using call options. I will continue this behavior until I lose money someday in a massive reversal (but I will probably make money on balance because I will also have on a VIX call position).
Another thing I'm doing: I'm finding far better entries using weekly options on the crowd's favorite stocks such as LinkedIn, the Facebook, Tesla, etc. The low volatility environment we're in is great for buying premium. LinkedIn in particular has been fantastic.
Near-term, there could be a pullback to the 1775-1778 area that would not cancel the melt up scenario. Below 1764.70 would raise some eyebrows.
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