I sense we spill lower at the open. I mismanaged my book after 3pm and gave back half my gains, finishing up 1% — a solid day overall. I was confused as to whether to go naked long or hedged and I ended up with a 2x TZA position to hedge against my oils.
Best case: small caps rummage lower in the morning but oil is up.
Worst case: oils knife lower and market gaps higher.
For whatever happens, I am 55% cash and will be watching the open closely. If you’re not trading the open — you are missing out on one of the very few windows to trade fast in the entire day. From 9:30 to 10:15am there is extreme volatility and then we settle in. If you’re done 2% by 10:30am, odds are you’ll be down all day and vice versa.
The market is sick and seasonally prone to large declines. The Evergrande business was just an excuse to bid lower, since now the market is sooo worried about energy prices, inflation, and higher rates.
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