There are two things we can say about the stock market (SPY) today…
- This sure is not a show of strength following yesterday’s hope bounce and…
- That support had better hold or it is time to short the bounces
I somewhat timidly (I’m not coded to be a natural bear player, but working on it) bought the puts well above support. I might not be so timid shorting bounces if the market breaks down.
I bought puts on the bounce in SPY that will pay off if the market takes any kind of significant correction this year. They are dated out to December. The mental ‘stop’ would be if it looks like the recent bear hysterics were just a fuel stop for an upside blow off to come.
It’s risky because the S&P 500, unlike the the Nasdaq, never lost daily chart support. But if SPY goes flat or keeps rolling here I’m going to hold these puts for what I’d expect to be good gains.  Taking the profit at support and wait for breakdown. Profit came too quickly.
Reminder: ETF updates are presented as a snapshot to current status only. More in depth work is done in NFTRH.
GLD turned last week’s resistance to support, which is now being tested as Ukraine hype unwinds and FOMC looms. This is a still bullish chart working off an over bought condition.
GLD is in consolidation at resistance. It is bullish until proven otherwise. Support is anywhere from the visual lateral support at 122 to the gap and moving average convergence around 125.
The Ukraine hysteria on Monday was almost too perfect; almost too per the script. One indicator that was done no good what so ever by the charge of emotion was the TLT-SPY ratio (one measure of risk ‘off’), which jumped as the least savvy players took the bait and knee jerked bearish as the media pumped the story. The subsequent reversal has damaged TLT-SPY, technically.
So if risk does not go ‘off’, where does that mean risk is? Well, risk would then be ‘ON’ in more ways than one.
Risk ‘on’ would mean further appreciation in assets and further degradation of the risk vs. reward ratio, which already sucks. A lousy RvR does not mean don’t play. It simply means that the market is at risk, similar to how silver was at 39>40>41>42>43…
GLD has reached the resistance that is the initial objective for the rally off the December bottom. On its bull signal but at a logical point of consolidation or reaction.