A siren call if ever I heard one. This market may end up lower.
The most important thing I am noticing that I do not hear anyone talking about is that Utilities have been cycled into discretely over the past month.
1-Month Performance
1-Week Performance
It was wise to go risk off in preparation of the election. If there is a contested election the market could sell off in the uncertainty.
The market was slowly rising higher on stimulus hopes, and with stimulus not having a chance of being negotiated until the results of the election - a contested election could drag chance of fiscal policy further out with the market selling off till it finds a resolution.
Just as stimulus was a catalysts for a melt up no fiscal stimulus is a catalysts for a melt down.
Keep in mind this selling volume is closing at lows of the day now, with higher than usual volume. This has all the typical signs of a bear market forming- why would volume be rising if everyone was just feeling peachy about how great there investments are doing? People adjust portfolios usually when they NEED to, not when they want to and that drums up the volume even louder.
The final point I want to make is the spike in volatility. When the VIX springs out like this you can not deny that people are willing to pay high premiums because they want bearish leverage in the options market.
You do not see the VIX spring up to levels like this because #bullgang went gangbusters buying debit call spreads.
My strategy is to open a Put Vertical on /ESZ0 Futures - expiring Nov 6th (9d)
1-Month Performance
- Utilities +5.61%
- Consumer Cyclical +2.18%
- Financial -1.35%
- Energy -6.9%
1-Week Performance
- Utilities -2.28%
- Consumer Cyclical -2.71%
- Heathcare -3.1%
- Basic Materials -6.24%
It was wise to go risk off in preparation of the election. If there is a contested election the market could sell off in the uncertainty.
The market was slowly rising higher on stimulus hopes, and with stimulus not having a chance of being negotiated until the results of the election - a contested election could drag chance of fiscal policy further out with the market selling off till it finds a resolution.
Just as stimulus was a catalysts for a melt up no fiscal stimulus is a catalysts for a melt down.
Keep in mind this selling volume is closing at lows of the day now, with higher than usual volume. This has all the typical signs of a bear market forming- why would volume be rising if everyone was just feeling peachy about how great there investments are doing? People adjust portfolios usually when they NEED to, not when they want to and that drums up the volume even louder.
The final point I want to make is the spike in volatility. When the VIX springs out like this you can not deny that people are willing to pay high premiums because they want bearish leverage in the options market.
You do not see the VIX spring up to levels like this because #bullgang went gangbusters buying debit call spreads.
My strategy is to open a Put Vertical on /ESZ0 Futures - expiring Nov 6th (9d)
- Buy to Open 3240 Put
- Sell to Open 3185 Put
- Capital Requirement: $950
- Max Loss: $950
- Max Gain: $1,800
- Probability of Profit 42%
- Theta is low because it is in a spread
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