Editors Note:

When the market is behaving irrationally either up or down we need to reconsider our objective.

The 85 point rebound in the S&P over the last two days has been nearly all short covering. A short squeeze rally typically lasts 2-3 days and then the prior trend returns. We have some powerful macro factors providing the stimulation this week and it is possible this squeeze could turn into an actual rally.

However, with the S&P rapidly approaching resistance at 1,920 we need to remember our objective. That is to trade when we have a better than 50:50 chance of making money. The game plan is not to trade just to be trading.

We have a decent portfolio today and a continued rally will help us a lot. However, adding new calls just under resistance on the S&P could be dangerous. We do not want to buy the top. Adding new puts today could also be dangerous because we would be joining the shorts in getting squeezed.

I would rather wait and see what Wednesday brings and then pick a direction.

No new plays today!


No New Bullish Plays


No New Bearish Plays