Market Report Bear Market, more to come
By
Todd Horwitz Chief Strategist BubbaTrading.com
Be Prepared not Surprised.
Markets have been under pressure for most of the year with a couple of solid rally attempts. However, we have seen the steady rise in the VIX index. Just a year ago the VIX average was between 10 -15, then 20 - 25 and now 35 – 35. What this tells us, option buyers are participating and outperforming the sellers.
There has been a lack of volume which indicates that there is more room to go on the downside. We don’t know how fast we will go down, but we are in a bear market. Based on the economy and inflation markets could see a 40 -60% haircut. Of course, there are no guarantees.
There is one major takeaway from bear markets, they create the most vicious rallies. The rally will look so good buyers get fooled before the sellers take over once again. There is no question the trend is down and could stay there for an extended period.
Calls continue to dominate but remember, they may be used in a synthetic put. The rest of the top five are all bearish including, Bear Puts and calls, put spreads and bear call spreads. Look for rallies to sell that reach resistance.
The bulls were buying MSTR, TNA, MSFT, QQQ and DASH while the bears were selling AMD, XOM. BBBY, TGT and WMY. Retailers are set to struggle without goods to sell.
As traders and investors, we have one thing to remember, follow the trend of the market. Be patient disciplined and leave your emotions out. The most important thing to remember is money management and self-control.
Todd “Bubba” Horwitz
BubbaTrading.com