The markets opened up positively on Friday- positive meaning we are down only 20-50 points, a stable pullback. Because, with the moves we have been getting daily on the Dow, 100- 150 points had become the norm. This is actually what happens if you pay attention to the vix (amount of put buying). When it was at 15, by definition, this meant that the market was pricing in 100 point daily fluctuations. At $25, the vix began to price in roughly 200 point fluctuations. So, with the market actually going into the positive as I write this, we can infer that the vix has pulled back, and it has in fact, reversed the trend of protection buying -for today at least. (look at the vix chart by the way, to have a move above 25 again would require a major turn of events, because to me, it looks like a double top and trend reversal- (see education). High beta stocks saw some profit taking today, Terex was among the worst, but that is all it was (profit taking), in my opinion. I am a big believer in the SP 500 right now as well because it has gotten cheap, and you can trade this top quality etf with leverage through my favorite investment vehicle, (if you can stomach the volatility), UPRO. (Which is pretty much what the site and portfolio is built around). I closed a round of puts this morning down around 40 points. While I feel I have more risk on the table because I have been buying into these dips, we are now closer to the 200- a time not to be selling or buying puts! When, and if, the SP 500 breaks below the 200, I will buy the puts again (as we have been saying all along). Follow the plan, otherwise the market will fool you with its’ trickery.
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