The Fruit Of Our Labor

Whoever sold me those SPY puts on the 27th wasn’t a happy camper last night and I have an inkling it’s going to be even worse when I cash them out later this morning. I sincerely hope some of you guys followed suit and at minimum loaded up on a bit of insurance when I made my case of insurance being cheap. Well, not anymore!

That was a nasty jump in volatility and that’s the reading last night, mind you. As I’m writing this the spoos are near the 1915 mark and if it holds into the open it ought to be good for a little emotional jump higher on the VIX Richter scale.

Which will also be where I’m going to sell 2/3 of my SPY puts – they banked $267 as of last night and given we don’t see a pre-open run up higher I may be able to sell them for a 100% profit. Well, that’s if my devious plan works out – never count on paper profits until you see them in your account.

Alright, enough of padding my own shoulder (someone’s got to do it as you guys are a tough crowd!) – all you really care about is what laying ahead, so let’s consult our charts. I prefer to chart the cash but as it’s before the open the ES will have to do – fortunately it’s pretty close to the situation I see on the SPX. The 100-day SMA is but a bagel throw away at this point and the bulls should enjoy a brief breather somewhere near the 1910 mark.

The one problem I’m having with this chart however is that there is zero prior precedence. Not once has the 100-day offered stable support in the past year – which is the price the bulls are now paying for an effervescent climb higher devoid of any retracements. It’s like climbing a steep wall – it’s fun while you’re going up but on the way down it’s a chilly sight as there’s nothing to hang your hat on.

The volume profile on the ES shows us a volume hole between 1900 and 1910 – so that is adding a wee bit more ammunition. My preliminary verdict as of right now is that we probably are going to bounce a little today or tomorrow, after which the tape will decide which way it wants to swing. Whereto is the big question and the Mole has got you covered. As usual I have collected quite a bit of material allowing you to properly assess the LT odds moving forward. Please step into my lair:

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You have been briefed – now have fun but keep it frosty. See you guys later this afternoon.

Cheers,