To be frank, Big Ben's announcement Wednesday was a dud.
You are currently bearish. And if you are leaning to the bearish side you just might have something to grasp onto going forward- at least over the short term.
Shortly after the announcement, the S&P (NYSEARCA:SPY) and Dow (NYSEARCA:DIA) moved higher, but the higher-beta Nasdaq 100 (NASDAQ:QQQ) and Russell 20000 (NYSEARCA:IWM) never gained any traction. This was the "tell" that should have forewarned the bulls what was soon to come. As soon as Bernanke took the stage at 2pm EST, all of the major market benchmarks began to crumble and continued so well into the close.
But, what is interesting is that we still have quite a few very overbought ETFs on a short-term basis. Until those are resolved, I would expect to see a continuation of the recent decline. A part of me thinks that this could be a decent sized reprieve, but I would need to see the bears push the S&P below 1400 first before feeling really good about a significant spike lower.
Anyway, all of my bear call spreads enjoyed the price action Wednesday and wouldn't mind some follow-through today. A push lower today and I should be able to get a decent profit out of a few more. More importantly, I wouldn't be exposed to the ongoing fiscal cliff saga. But, even with good news, my guess is that Wednesday's high should act as a nice area of resistance… just reading the tape.
Again, the great aspect of using out-of-the-money spreads is that you can be completely wrong in your directional assumptions yet, due to the margin of error they create, still make maximum profit in the trade. No other trade offers these types of benefits.
Disclosure: I am short SPY, IWM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.