Todd Horwitz Chief Strategist BubbaTrading.com
Be Prepared not Surprised.
Last week we saw an epic move on Thursday and Friday. We know markets are trending lower and have a lot of room on the downside. We also know that markets never announce their intentions but follow the trend.
Last Thursday, equities were getting hammered, Gold, Grains, Bonds, and Crude were up huge. But something in the morning someone flipped a switch, equities started to rally and didn’t stop until big gains were made. At the same time commodities were crushed from big gains to losses.
The action continued Friday, equities exploded higher, commodities were crushed. This was the perfect example of a short squeeze, rip your face off rally. No one knows what this week holds, but the lower trend markets are favored to be under pressure and give ground.
Call buying led the way as they do every week followed by Put buyers, Call and Call spread sellers. All negative strategies. Volumes were light which fuels the downtrend. This is not to say we can’t see a reversal, but the best guess is to sell the rallies.
The bulls were buying AAPL, AMD with the rest of the top five being buyers of bearish positions. They were buying GLD, VXX, UVXY which benefit by down moves in the market. The bears were selling SPY, QQQ, RSX, CLF and OPEN. Despite the late week rally it is apparent the bears are in control.
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