Last time, I said that though the VIX was low, the $-weighted options said "Sell", and the market's momentum was down, the big drop at ISEE into Buy territory was a ST Buy. I noted the serious risk to the market, but due to seasonality and persistent price strength it was hard for me to be too Bearish. Fair enough, though the market did react very well at resistance, and that was telling. Last night, we got no improvements in sentiment. The options are almost uniformly Bearish for the market. We got a FL/FS 2X Sell too, implying a decline starting today or tomorrow. The big story was ISEE swinging all the way to Sell territory in one day. That's a ST Sell too. Also, the 10-day moved to Sell territory too. That implies a weak or more of weakness. Now, the trend is still up, but momentum is still down and that's good enough to give us some trades on the short side, and maybe if something ugly happens, we'll be positioned for it. Otherwise, the market is resilient. As a rule of thumb, here, short resistance, and buy good support. One major caveat--if some really bad news does hit, the downside could be magnified due to the utter lack of hedging. That doesn't mean we WILL go down, but it does mean that there's more downside risk (not probability of downside, per se). OTM January puts might make some sense here.
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