I spent the past couple of days wringing my hands about a big pop, and thanks to the chilly inflation report, we got it. The /ES lurched higher, and as of this composition (a few minutes before the open) we’re up about one percent.
The /RTY is up a similar amount, although the amount of the pop that already faded is quite pronounced. It looks like a lot of folks got stopped out at wretched prices.
It also makes all the sense in the world since the VIX was definitely near the top of the kind of range it has revealed over the past year or two. VIX in the lower teens? Short the market. VIX in the upper 20s? Take your profits.
There’s a reason, however, I’ve tried to simultaneously declare my terror at a rally and yet remain in my positions (expressed last night in the premium post The Age of STFR). I go through my positions one by one quite regularly, and rip or no rip, they are all good bearish positions. See, there’s a world of difference between something that has been battered to death like NVDA………
…….versus a setup like UNH which seems absolutely prone to a tumble.
I obviously have no idea how long this bounce will last. A week? More? Less? All I do know is that I will be very interested in deploying the 25% cash I’ve got sitting around into new positions once we get back to more appealing risk/reward ratios. I welcome the bulls, because we really need to get the VIX back down and the prices back up!
