We had an incredible finish late thursday and all of friday that gave the S&P 500 a shot in the arm for the month June. The index was well on it’s way to having a flat month at best and possibly ending negative. All of that changed instantly and anyone short got their ass handed to them. What’s the game plan now that we’ve rallied? I don’t want to follow the herd on this way and chase this excitement. I’m not an idiot either, I don’t care of this rally is real or not but what I am positioning for is a pullback down to reality. Scouring the indicies, the IWM looks ripe to me as being way overbought. I’m not looking for gloom and doom here, but a reversion to the mean which would be completely healthy considering speed and size of this move.
Nothing is written in stone, but when I do open short positions I sure as hell do don’t them at the lows. I’m trying to place bets for pullback or failure when stocks/indicies move into strong pockets of resistance. It also helps raise probability of me taking the trade if the move has come from two days of trading. These trades may blow up in my face and they are big sizes as well.
$80 IWM puts (bought at the highs friday)
$79 IWM puts (bought midday)
I’m looking for IWM to come into one of these retracement levels with a conservative target of ~$78.50 I’ll be looking to lock in these trades.
