Simpler Sentiment – Weekly Wrap Up 11/4/16

The S&P 500 heads into the weekend looking to end eight straight days of losses, the longest in many years. Combined with 8 straight days of VIX gains it is apparently the first time in history.

The SPX currently sits at 2090, just 2 points up on the day. It has fallen every day since October 24 after being above 2150. So even with the declines it only down less than 3 percent.

The Simpler traders were justifiable neutral at the start of the week, with the exception of Chris, who was looking for a 50 point decline.

The VIX is now up above 22, up 75 percent over the last 9 days. The VXST, the 9 day Volatility Index has climbed from 11 to its current level above 29.

Chris got his target of 50 points lower. Now he thinks “we are in for some backing and filling”. He adds, “I am watching the bonds, as a refusal of them to rally will put a lid on any S&P 500 rally”.

John is noting that the markets are increasingly nervous. “This environment is best adapted to day trading, since, like a box of chocolates, each morning we never know what we are going to get. My plan is to be mostly in cash heading into the weekend and head into the next week with a fully loaded mental gun.”

Henry commented that “The OPRA $PCVA (put call ratio on all optionable products) has seen a sharp rally over the past week and with a close above 1.0 I’ll have to learn towards the bullish side of equities. This last drop may have been a bit sharper than most expected helping explain the VIX, but selling volatility from these levels has worked well in the past and that’s what I’ll be working with into next week.”

Tucker is also commenting on how nervous the markets are before the election. “Keep it light until the dust settles after the election.”

David adds, “Perhaps I am stubborn, but I am still favoring the idea that the decline in August is only corrective. However, I don’t want to build a whole lot of bullish exposure here. I’d prefer to see the market assert itself to the upside first and then try to hitch a ride. If, in the meantime, it just keeps breaking down and particularly if it gets and stays below the S&P 500 Voodoo snowline near 2072 then I’ll put any immediate bullish ambitions on hold.

Carolyn is also waiting on a bullish break. “The immediate trend in the S&P is still considered bearish on a 30-minute chart. What I’m focused on is waiting for a break of the bearish symmetry of this time frame chart to start trading on the buy side again. With this election I have no idea if we get a flush first and then a reversal, or we reverse in front of it. Bottom line, I’m waiting for the bearish symmetry to break so we can start playing the long side again, which I’m anticipating because of my Fibonacci timing work!! Remember TRADE the setups not the opinions!”

Join John and the Simpler Trading Team as they provide live trading coverage throughout the day next Tuesday & Wednesday. You can reservce your spot via the link below.

Trade The Election

Chris McKhann

Chris McKhann

Chris McKhann has been involved professionally with the stock market for more than 15 years and specifically with derivatives for 12 of those. He started as a stock broker, but quickly moved on to options and futures trading. He spent some time as the Derivatives Product Manager for TD Ameritrade. He was the chief analyst and hedging strategist for OptionMonster. He has been an options trading educator and content provider for many years. His writing and analysis has been featured on Reuters, the Wall Street Journal, Forbes, TheStreet, CNBC and internationally. He has also designed and traded option and futures strategies for prop trading firms and hedge funds as well as managed accounts.

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