Retail investors open the market, Pros close it.

Nice bounce indeed.

Pre-market SPY trade is up, up, and away.  Right now we are at close to 205. Above my target for the bounce off the Brexit bloodbath.

I consider it too risky to buy here, so I have trimmed my long bullish ETF holdings, and will watch to see how the day progresses to consider closing the bullish bets.

My bias is that the bounce will lose steam, so bearish FAZ and TZA will be the way to go.

If we stay above SPY 204, and close above it, rally on and long we go.

Bottom line is we need to observe how the market moves and get on the right side of the trade.

 

Turnaround Tuesday?

SPY RangeHuddle up!

The SPY last made new all time highs back in May 2015. We have been range-bound going sideways for over a year.  No way to know if it is a pause that refreshes or a top, except in hindsight.

Since May 2015, the market has tried to drive the SPY below 180 which held, and above 213 which failed 3 times. The range is clearly defined.

The Brexit hemorrhage has caused technical damage which the chart makes clear.  We have no idea what fundamental damage has occurred.

Great, now what do we do?

Turnaround Tuesday?  Not in my opinion.  This is a dead cat bounce.

Today’s bounce is an opportunity to scalp the fast moving 3x ETFs.

I can only see, and successfully trade, oversold, overbought, support and resistance.

Low of the day yesterday, around SPY 198,  is the stop point on long ETFs.

204 is the resistance line above I have to expect will hold.

My plan already underway is be aggressively long in FAS, TNA, SOXL, SPXL with stops at SPY 198, adding and trimming until/if we hit SPY 204.

If that resistance holds, I will pivot, and get aggressively short with TZA, using a cover stop  of SPY 204.

Time to execute that plan.

 

Brexit, the Monday After

 

Here is what I know.

  • I have no idea if this equity clobbering has just begun or is nearing a leveling off phase.
  • I need to protect my capital.
  • My long positions are small enough to hold during this ride, for now.
  • I can profit from these volatile market swings.

Here is my plan, sharing it to help you frame your own and to welcome push back.

  • I am 75% in cash as the week begins.
  • I plan to profit from volatility, trade and scalp, with small chunks of ultra ETF’s FAS/FAZ and TNA/TZA
  • A market close on the SPY above 204 would lure me into getting more aggressive with long positions.
  • A kiss/test and failure to hold 204 would incline me to get short the market in a bigger way.
  • I plan to be very patient, wait days, weeks, months, and even years to see if a bottom it put in the SPY before I deploy cash into longer term positions. and reduce my cash below 50%

Brexit

The smart money is all too often as dumb as the dumb money.

So it is this morning as the markets get CRUUUSSSHED!

All bets are off for now.  If you have dry powder and know how to trade, today will be a blast.

We will regroup next week when the dust begins to settle.