Last Monday we could feel a storm brewing and it looks like the clouds are about to open up. The resistance we spotted in the S&P at about 4320 (read the article here) seems to have been too much for this current bear market rally. The market seems to be losing traction and is setting up for a drop this week and it isn’t a question of if but more of how much.

The other key sign is very clear. Take a look at the VIX:

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That jump we are seeing today was the final straw we had our eye on as the pressure built up. Now it is time to start looking at landing places for the drop to settle at. Is it time to look at Puts? Is there a spread trade that works well in this type of scenario? Grab Don Fishback’s Quick Guide to Options Success and look at the strategies he lays out and what conditions they work best in. It is a great place to turn when things shift as it highlights what trades become more likely to be profitable.

Keep learning and trade wisely,

John Boyer


Market Wealth Daily