Market Report Bear market rally
By
Todd Horwitz Chief Strategist BubbaTrading.com
Be Prepared not Surprised.
What a week for markets, we saw a vicious rally to close the week. This appears to be a bear market short covering rally. You must remember that bear market rallies look great and appear to be strong. However, when you look deeper, they are typically on light volume with shorts covering.
There appears to be some “funny business” as we head towards the election. Nothing makes sense from commodities to equities; commodities should be rallying. Market liquidity has dried up which is another indication of a bear market.
The option markets except for the VIX are telling a bear story as well. There are Put buyers and Call sellers along with the usual call buyers and premium sellers. The VIX took a hit last week but is still near 30.
There was a lot of interesting trades and choices made by the buyers. They appear to be buying ETF’s including XLE, SPX, XLF and TNA. The bears were selling SPY, QQQ, TWTR, MSFT, and PNC.
This week is huge for earnings with AAPL, AMZN, MSFT, GOOGL, and many others. We look for the markets to resume the downtrend and the bear market to continue. We do haver the election and the FED over the next couple of weeks.
Remember, we can’t predict what’s next, but the price action will give indications and guide us in the right direction. All signs are starting to point lower however flexibility is the key to trading successfully.
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
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