Market Report Bears Take full control
Todd Horwitz Chief Strategist BubbaTrading.com
Be Prepared not Surprised.
If we were uncertain that we were entering a bear market, there is no question. Although markets were only down small for the week, the Russell and Nasdaq have broken key support levels. The Dow and S+P are close which indicates there is more selling to come.
Last Wednesday, we saw a huge, short covering rally which was driven by the FED meeting expectations of a .50 bps hike in rates. Early Wednesday sellers were out in force, by the end of the day all losses were gone, and big gains were seen across the board.
It didn’t take long to wipeout Wednesday’s gains as the bears came to sell on Thursday, not only wiping out the gains but making new lows. Even a good jobs report couldn’t save the markets Friday the selling continued; every rally attempt was met with sellers making another down day.
The option markets told the same story with most strategies being to the negative side. The top strategy as always was long calls, but we don’t know the other side of that trade. Rounding out the top 5 were Put buyers, Call sellers, Iron Condors and Put spreads. The VIX also charged higher.
The bulls were buying AAPL, AMD, FB, TNA, and MSFT. The bears focused on selling IWM, TLT, SPY, QQQ, NFLX. It appears we have index sellers have focused on stock picking and index selling.
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