Completely on the sidelines

I have an update to my post from last night. As expected the massaccre began in the morning. In my last post I surmised if Ben cuts by 75 points, there is a good chance the massaccre shall stop. Well that is what happened. Although we are down for the day so far, Bulls can still claim victory because we have painted a bullish hammer coming at the lows on the daily chart, very similar to August 16th lows. In plain english in the epic battle between the bears and bulls the closing price ended much closer to the highs of the day than the lows of the day. Not to mention the fact that VIX finally obliged us with extreme levels, levels that some experts think are necessary to call at least a tradable bottom if not a long term bottom.

As a result of these developments, I took my opportunity and covered my put options I had opened on SPY selling at 5.15 (purchase price was 4.05) a 27 % profit.

Although in near future we may not likely have the kind of bleeding we had this morning there is absolutely no reason to be a bull right away. I have stepped on the sidelines as I indicated yesterday. I have also covered my short term positions. It is difficult to predict if we will still have a further downswing. Signs point to a short term bounce, but the regular certainty is not there. So it is better to keep my powder dry again. Now if you are planning to buy leap options or stocks that you may want to keep for a year or longer, please be my guest and buy those cheap suckers right away!

Hang in there
Krish Rathi