This too is a bit of a concern, because more often than not, when the
markets have plenty of upside ahead, small caps do have a tendency to
lead, so the fact they’ve continued to lag all year is something worth
considering in the grand scheme of things right now.
Sure, today’s new high could be a prelude to much higher levels
ahead, but it could also end up being a new high traders are willing to
bet against for the time being. Meaning, we’ll know soon enough if
today’s new high is one we can trust, or if it will end up being nothing
more than a false breakout.
The old adage of buy low and sell high couldn’t ring more true right now, because at what point will the recent bullish exuberance finally test investors’ conviction? We suspect pretty soon.
And, although the financial media has an uncanny way of always backing up the bullish landscape with stout fundamental context and reasoning, they’re also the first to change their tune once the markets do decide to fall apart for a while.
In other words, their lagging analysis is always supportive of what has happened, not what’s going to happen, so it’s important to remain completely objective, and not fall victim to the media’s reactive commentary.
The bottom line is considering the NASDAQ hasn’t quite achieved that trend line in the above chart yet, we’re going to sit tight until possibly tomorrow before we open up an official index short trade. We had every intention of opening up that trade today, but considering what has happened with IWM, and small caps in general today, we’re going to sit tight until possibly tomorrow.
At this point, there’s no rush in fading against these markets just yet, because although we do believe these markets are ready to pullback soon, it’s definitely better to be out wishing we were in than in wishing we were out. We’ve got plenty of ideas working well right now, so there’s really no need at this point to be getting too overly aggressive.
A little patience is never a bad thing, as it’s entirely possible the risk/reward may be even more attractive as soon as tomorrow. However, there’s still some pretty good technical and fundamental context to consider some index put options a few months out, as the price of those index puts right now have clearly gotten cheaper and cheaper.
Just make sure if you do pick some up, you’re only allocating what you’re completely willing to risk, because in the event these markets simply continue higher and higher, you’re not going to want to be too overly exposed to an options trade like that.
The old adage of buy low and sell high couldn’t ring more true right now, because at what point will the recent bullish exuberance finally test investors’ conviction? We suspect pretty soon.
And, although the financial media has an uncanny way of always backing up the bullish landscape with stout fundamental context and reasoning, they’re also the first to change their tune once the markets do decide to fall apart for a while.
In other words, their lagging analysis is always supportive of what has happened, not what’s going to happen, so it’s important to remain completely objective, and not fall victim to the media’s reactive commentary.
The bottom line is considering the NASDAQ hasn’t quite achieved that trend line in the above chart yet, we’re going to sit tight until possibly tomorrow before we open up an official index short trade. We had every intention of opening up that trade today, but considering what has happened with IWM, and small caps in general today, we’re going to sit tight until possibly tomorrow.
At this point, there’s no rush in fading against these markets just yet, because although we do believe these markets are ready to pullback soon, it’s definitely better to be out wishing we were in than in wishing we were out. We’ve got plenty of ideas working well right now, so there’s really no need at this point to be getting too overly aggressive.
A little patience is never a bad thing, as it’s entirely possible the risk/reward may be even more attractive as soon as tomorrow. However, there’s still some pretty good technical and fundamental context to consider some index put options a few months out, as the price of those index puts right now have clearly gotten cheaper and cheaper.
Just make sure if you do pick some up, you’re only allocating what you’re completely willing to risk, because in the event these markets simply continue higher and higher, you’re not going to want to be too overly exposed to an options trade like that.
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