Check out the 3 month spy chart. The bearish flagpole is inevitable. What I'm thinking is that the pattern is about to complete itself, sending us lower. The trend was upwards from 8/10 to 9/1. Beginning 9/1, we flipped, our falls have been larger than our rallies, creating a bearish 3 week bear channel. If this trend persists, which I think it may, we will break through 1100 support. The overall tone at 1150 isn't as gloomy as the previous visits. The market is almost mentally prepared for a drop. Gold, silver, copper, and the dollar are acting as if we are in a deflationary time period. I think stocks fall next.
My trading strategy
Nailed today. Went Short via FAS $12 puts @ 1180 SP on bounce. Normally, don't like entering trades mid range. If we break below 1100, I see that as top of new range so will short further. If we hold 1100+, I will go long. If we rally on legitimate news I will go long. If on bad rumors, I will short near top of range. Currently in spxu, with 1.2 stop. Minimum 1% return. Hold FAS $12 puts. Sold half of position for break even + , left half for no risk / high reward. If daily swings become extreme, will execute appropriate intraday trades. Prefer not to invest in individual stocks in turbulent times, beta is too elevated. Any spat of news can unjustly send a stock falling/ rising.
Tomorrow's action is predicated upon US job numbers and GDP revision, as well as the German euro bailout vote. To be honest, I'm not sure if I could predict the outcome even if I get the numbers right. For example, jobs numbers could be abysmal, but we rally bc ppl expect qe3, as hinted by Ben B. Like today, I'm waiting to see the numbers, how the market reacts, and how I think they will impact the macro picture. Essentially, will I join the bandwagon or play contrarian. For instance, if we get really bad jobs numbers we will fall because we've had poor numbers for weeks and the non farm payroll is out next week, a stronger indicator, made up of the weekly numbers. Conversely, if numbers come in at 400k we could see a relief rally, some fears subdued. In conclusion, only if I believe the difference between the current trading level and where I think we head by end of day/week is great enough, will i enter a trade. Bad numbers could be bought if we get a valid entry point, not chasing... In a bounce event that isnt warranted, I will buy $18 spxu 10/22 calls for 2.50 per contract. If we continue the downward trend, and I think it will continue, I will buy $19 10/22 spxu calls for 2.50. I will look to sell by the end of the day at the latest, unless we break through 1120 convincingly. I see a friday rally to close out options/months end/quarter end, etc. Gotta pad the stats. If we get good numbers/news out of europe, I will cover my shorts (all gaurenteed profit) and go long til friday at close most likely.
All in all, I'm happy with my current trades and low exposure/ being dominantly in cash. I think there will be ways to go before we bottom. At that point, or a rally is sustained above 1220, I will use all funds and leverage on things I feel that our undervalued immensely. At the moment I'm looking towards TOT, TTM, C, MSFT, XIV, GTU, and VZ - as my entire portfolio, equally weighted. I will buy gold before the stocks because it tends to bottom first. My overall thought process is that the companies are leaders in their field, provide solid dividends, stable, and growing. XIV is an inverse ETF to vix. When we bottom it will be at 5. Historically, it is at 20, so figure can get a 300% return. Gold, I've been saying will get to 1500-1600 before rebounding, but may fall further. All I know is that world politicians love to print money. Gold is valued by demand and the value of the currency it's bought in. So if countries keep debasing fiat currency, gold will go up bc demand will be higher due to less confidence in gov. + more supply/ less demand in paper money. Due to a higher supply of dollars, will take more to buy same amount of gold. My price target is 2900 by 2018, but not suggesting buying quite yet. I'm thinking October 14-15, Friday before options. In the end, always bet on the USA!
Trying to get my ideas out there. What is everyone else's strategy for tomorrow? Play it safe like me? With a few small bets? Anyhow, good luck to all.