We had a trend day down in SPX and general markets today with headlines of further conflict rolling in. The further the vix rises and the more markets sell off, the harder it is for it to sustain the clean downtrend. Let’s see if tomorrow is a continuation down to test 5000 or if its a chop day. Wednesday is vixpiration, where the monthly vix contracts expire and new ones replace them. Most of the time, vix melts into that event and lifts the market, so I wouldn’t be surprised if either tomorrow afternoon or Wednesday we get a considerable bounce. A lot will depend on the headlines.
My only trade of the day was CVNA puts which worked well. We talked about this idea on Sunday Scan so its nice to see it play out for people in real time. I exited puts for now but if the market is in for a true correction then this has a long way to go. All headline dependent in the general market tho so no real bias and am open to what the market presents.
TSLA more bad news with layoffs and we have earnings coming up. 150 is first downside target over the next week or two.
Bond yields are still way up, even with the war headlines. If true conflict breaks out, and things get very serious then people will buy bonds and drive yields lower (remember, bonds and their yields move inversely to each other). In this case, falling bond yields would NOT be bullish because it is a fear trade, not an inflation trade.
IWM is very vulnerable to downside in this kind of market with double bad news with bond yields and fear in the market.
If we do get a strong flush in the general market and it looks like we may be nearing a bounce or a reversal, I’ll be looking for the names with relative strength to target for upside. I won’t know which names those are until tomorrow.
Finally, JPM gave back its bounce and continued lower. GS was up after earnings but gave back some too. XLF and financials on watch for downside unless the marker bounces.
Thanks Chris