Market Report: The Bears are seizing control

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

In a holiday shortened week the bears took full control of the markets. The action was quiet, and volume is light which indicates that the trade we are seeing is retail buying. It appears that the commercials and institutions are letting the bulls buy before selling them off.

We have been watching this developing market action which has been pointing to a bigger selloff. The technical facts are clear, rising VIX, lack of real price action with higher opens and lower closes.

Add to the technical side of the market, spiking inflation with an 8.5% CPI and exploding oil prices. Interestingly enough, high oil prices were easy to predict, the lack of FED action as they hide from inflation was not. Mortgage rates are rising, housing is slowing, none of this is a good recipe.

Option traders have turned more bearish as well, other than the weekly leader of call buyers which can be anything the rest are all bearish. Bear Puts and Calls, Iron Condors, and bear spreading indicates discomfort in these markets.

The bulls were led by AAPL, QQQ, TSLA SST and GDX while the bears were selling UNG, SPXW, SPY, DOCU, and FB. With earnings season beginning the picture looks weak, there could be a lot more selling to come

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