Market Report Huge rally should fail
Todd Horwitz Chief Strategist BubbaTrading.com
Be Prepared not Surprised.
Last week saw a huge rally in equities which appears to be no more that a bear market rally. There is a high probability that the sellers will be back in force. We must remember that bear market rallies look unbelievable right up until they fail.
The rally was a shakeout of the weak hands who are attempting to short markets but always get forced out. This type of action is characteristic of a bear market, there is nothing to say contrary to that at this moment.
Obviously, we cannot guarantee the selling will resume however every indication point to the bear market continuing. Only the next few days will tell the story, but it is our opinion that next we when we write the update market will be lower than they are now.
Option traders positioning remains bearish with put buyers and call sellers leading the way. Of course, nothing will replace long calls are the top strategy because of their flexibility. The top five finish out with iron condors and bear call spreads.
The bulls were buying AMZN, TNA, MSTR, AAPL and AAL. The bears continued to sell XOM, SOFI, SPXW, BABA, and USO. Looking for a crazy week with a bias to the downside.
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