Quick Update

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The S&P blew through that 1110 area today and closed near the lows. By all historical comparisons, the market should have rebounded today after the open. So now we are in a situation where almost every indicator imaginable is bullish, but the market has not responded. My view is that we are likely to take out the November low before rebounding, and am open to the possibility of an outright crash over the next couple weeks.

As for strategy for exiting the open SPXU trade, it makes sense to sell right now because the market should rebound. But at the same time, that would miss the possibility of a huge gain if the market really craps off a bridge. So anyone holding this may want to do some of both......sell part at the open tomorrow, and hold some also and wait for a reversal candlestick at least before selling out.

The equity put/call ratio spiked today (0.96) to a reasonable level to anticipate a reversal. Other possible indications of a rebound are a hammer reversal in the CRB commodity index today and the failure of the US dollar index to continue up as the market fell today.

The VIX made another huge move up today, and that is 8 higher highs in the VIX since its April low. I haven't talked about this in a while, but often times there will be 12-15 higher highs (or lower lows) in the VIX before a trend change, but I would only look at this as a loose confirming/disconfirming factor.

Based on the charts and indicators and candlesticks, my expectation is that there is likely to be a low below today's low tomorrow. Tomorrow is OpEx but it could be a volatile one. We may expect a gap up, then an early morning sell-off, then a rebound later in the day. If that happens and the market closes positive, it may justify a trade exit.