Swimming is not safe yet. The market is up but most of my screen is red. Many of the market leaders are still bleeding and my indicators are telling me that this is not a bottom (pardon the pun).The VIX is not yet screaming enough and a number of oscillators that I use still have readings above the August and November lows. It is now almost too risky to continue to short (I covered my AMZN puts) and too early to go long (I covered any AAPL long positions I had).
However, certain stocks will bottom before others do. When I see true fear in the tape of an individual stock, I do have a tendency to dip my toe into the water with call options. It needs to be a liquid stock to practice this, but GRMN is a prime example.
GRMN received a downgrade (from buy to hold) this morning and the stock has fallen this morning at open more than 10% on shear panic. This is the ninth down day in a row for GRMN and longs seem terrified. I, therefore, just dipped my toe in the water for some Feb75 calls for a trade.
We will bounce and GRMN will have great Q4 earnings. It is now getting silly.
Extreme caution today. I think a whipsaw or two is probable and a bounce is likely this week. Remember that the bounce needs to be broad based. The Nasdaq actually looks more oversold that the broad market, so they may lead us out.
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