The Minimum

  • The market has now done the minimum, given the oversold conditions and sentiment readings. We typically see at least a bounce and we have bounced.

  • There is extreme call buying today. That is not necessarily a bad thing as it takes a long string of days with call buying before it becomes bearish. It does tell us that we are no longer in the early innings of this rally.

  • It has paid to buy weakness and sell strength for the past few weeks. Rallies and declines have not gone very far recently.

  • I rolled my short SPY put position to next week using the weekly options this morning in order to maintain my modest trading long.

  • If the market continues to rally next week I will likely move to a more neutral posture.

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