Just a brief post today as I will be traveling. Looking at the action we see markets that continue to show divergent action that favors ignoring bad news. Last night’s negative earnings reports have already been discarded in overnight futures trading it seems with rallies in Asia and the #DAX rallying back to highs as it does every day it seems.
The set-up remains for a sharp sell-off in later January and February yet today is Friday and a large POMO so those bearishly positioned may get some better prices to scale into. Basically I would not be surprised to see that push into the 1860 area that I discussed previously. As I’m traveling I have set-up some large limit sell orders for $ES 1848 and $ES 1853.
“There is no training..classroom or otherwise..that can prepare for trading the last third of a bull market. Typically no logic to (the last third of the bull market) irrationality reigns supreme, and no class can teach what to do during that volatile reign” Paul Tudor Jones
Watch what they do and not what they say. I’ll leave you with two screenshots of put action in the $IWM for February and March. Looks like someone has placed some larger put spreads that favor a decline into the $105-$113 area by then. While these type of trades are not a guarantor of action these are large bets very outsized vis a vis any other call action and therefore definitely noteworthy. In other words: I’m not alone in my outlook for a sizable correction into that timeframe.
Best of luck today.