Disclaimer
This for informational purposes only.
Discussion
Trade: Sold September $435, December $400, and June $350 puts before noon this morning.
Rationale: As I’ve been mulling over via the live market journal on the private Xwitter feed, I’ve ignored the modestly bullish signals that have emanated from my cross-asset market analysis process because I have a high conviction view SPX is going to correct very sharply into the seasonally dangerous September/October period. Note to self: Never ignore your signals. Do something, anything about it, at least on the margin.
Given the cross-asset market response to very weak JOLTS data, most notably very weak relative defensive equity sector strength, I need to step aside for risk management purposes while SPX works off a near-term oversold condition. I think everything is coming to a head here very soon, but the soft landing narrative can stick for the time being, perhaps even into the September FOMC meeting - doubt it, but it’s possible. So, since I’m playing the market set-up very aggressively via a mix of short- to longer-dated puts, I need to be nimble. In a long-term strategy I’m not changing my short position one iota. But for highly aggressive puts positioning, nimbleness is the key. I should have been more nimble when my process picked up bullish signals, but that's what’s tricky about mid-correction periods - the market can easily break in either direction, and since I called out the potential for weak labor market data to be the trigger for an upside breakout, I needed to heed that this morning and stop myself out of some puts.
But make no mistake, the set-up is there, it’s just a matter of bobbing and weaving.