All those stocks I said to short did very well today. That aside, here's the way to play the market --
Options expiration is 2 weeks away. Here's the problem right now going long into it -- TONS of calls have been bought by people trying to get even using this rally. Of course it could keep going up. But the most likely result will be that ellusive pullback in a wave 2 to wipe out many of those long calls.
You see, the market has a mechanical thing to it that many don't understand. The biggest one is how market makers and specialists play. If you want to be a market maker, you are required to be a 'buyer of last resort'. Well, this last decline was the mother of tests for these firms. They had to be buying all this stock that was sold to them in the freefall. Well, now it's time to get even. They know based on their trading books what the real short interests are. They now are going to jam those short positions forcing them to be forced buyers which means buying their stock they bought all the way down now all the way up.
So, there's a little game that's going on right now where the MMs get to make money. So, don't be suprised to see the market go higher than you think.
The same holds true for those who sold calls. Many of those are now in the money. Well, MMs don't like that. They are short those positions. So, it's time to kill 'em. Today was a distribution day in the market. With 2 weeks to go, expect more of them to kill the time value with the big selloff days to be next week.
But use that as your long entry into the market. I'll have speciifc stocks to use.
