HAL9000
Short

SPX: Flashing cautionary signals (again).

SP:SPX   S&P 500 Index
My cautious call of 2 weeks ago may have been premature (see link below).
However, we are now seeing additional cautionary signals on the SPX:
1. Two consecutive down days at the beginning of this week;
2. Visible break yesterday on the index (gap down);
3. Reasonable volume on the downside;
4. Traded and closed below SMA10;
5. Tech indicators turning ( MACD , RSI , Stock);
6. RSI coming from very overbought levels >85;
7. Treasury yields picking up;
8. Some divergence/topping signs from tech market leaders;
9. High-volume surge in the VIX             (please see chart below);
10. VIX             broke/closed above two resistance levels in a day.

Current earnings should bring further steam to this market, either for a highly-expected consolidation or for a rebound.
In this context, am warming up to buying downside exposure in one -or multiple- of the following ways:
1. Reducing portfolio risk by taking selective profits/losses;
2. Buying puts on selected stocks ahead of earnings ;
3. Shorting the market outright ( SPY             , QQQ             );
4. Buying volatility outright ( VXX             ).

The rest of this week should be interesting and followed closely.

snapshot

Comment: Yesterday the market showed some difficulty picking up to/over its 2,850/2,875 glass ceiling... The weakness took place in increasing volume. Good earnings in large techs do not seem to want to take the stocks higher. More caution warranted from here. Will keep eyes on tech earnings tonight (AAPL/GOOGL/AMZN) - If those fail to lift the market, this will be yet another indication of a turnaround, perhaps the beginning of a proper consolidation. The game here is to protect profits and to be very careful with any new positions.
Comment: Market weakness confirmed. Building a position in volatility by purchasing VXX. Stopping this thread.
Trade closed: target reached
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