Yesterday we tried something foolish , more on that foolishness in the next blog post. But, let's try to understand where we stand in this market "crash" and what is next.
Ivanoff suggests this is a market bottom like Oct. 2014. Technical trader says puts haven't been this high since March 2007, hence this is THE BOTTOM. Is it? May be both are right. What if they aren't right? Are we trying to playing a guessing game on who is right or wrong? Are we gambling with our money on guessing?
I am going to post tomorrow what our game plan is. Hence, watch out!
1st let's look the current situation from my perspective. Last market update was this. Our market guage suggested a decline. We got a 3% decline. So, what is the next scenario? Chart below.
1) Market bottom like Ivanoff suggests and bear crushing rally!
2) What if market declines further for 1-2 days and then rally for few days and further decline?
3) Who knows what happens? And why exactly are we trying to guess!
This post is about perspective, so let's just do that. Chart below.
More puts have been bought in several instances before. And does more puts bought = harder the market crash? I don't think there is a linear relationship between extent of market decline vs puts. It is not wise to guess based on "VIX hasn't risen more ever" or "puts are high" this time.
So, what do we do? That is for tomorrow. Thanks...........