Death March

As new rapid upside has not been easily gained the bulltards have now switched strategies by using another weapon in their arsenal, which is simple denial of downside (i.e. the bearish cock block). I know that sounds a bit quaint but in the context of a nine month + rally it is important to realize that many eager bears poured a lot of their coin into OTM December puts, which are about to expire worthless.

BTW, the same game has just been played with gold futures put holders – remember, those December gold futures puts actually expired in November. I can only imagine how they must feel now watching gold drop by 70 handles in two days a mere two weeks later. Yes, the market is a cruel mistress and one can never underestimate its ability to inflict pain on the greatest number of participants. I myself am looking at greatly depleted index put inventories – the bulk of them are January and March but even those have taken a major hit. I’m sure many of you can empathize – and it’s the risk we take. Sideways markets are nothing to smile at for option traders – unless you play market neutral strategies as for instance iron condor. Personally, I am not a bit fan of those – but to each his/her own, and they would have been a great trade in the past four weeks.

The downside scenario is losing much luster at this point – seems to me what we’re looking it is a final slow and grinding and frustrating death march for the bears. Perhaps once everyone leaves for X-Mas vacation we’ll see a quick spike up to new highs, seems 1140 would be a reasonable target as much resistance is waiting in that cluster.

Cheers,

Mole