Buy not Run!

I predicted several months ago that S&P could go down to the 1800 level in 2016. While it was a wild call that I may sound like a crazy guy for such a bearish call and likely not many people would believe at that time, it may prove to be too conservative. Honestly I certainly did not expect that S&P would go almost straight down in the past 2 weeks to as low as 1812 in today’s low. Wow, really unbelievable that we are almost at my target!! Now I think the market has A LOT MORE to go downwards and may go down towards around the 1600 level this year. There are simply too many risks out there worldwide that may trigger a meltdown of the market. This world is in a total mess and this market is very sick that nothing can easily fix it. So don’t feel bad at the moment as you may likely see more pain in the months ahead that will make today’s low a lot better.


Having said that, today’s panic selloff is really felt like a capitulation that almost everyone is rushing into the exit and sell whatever they have. A lot of babies have been thrown out with the bathwater. This is a situation where a major bottom may likely be reached (although only for a short term for this market). I think at least a reversion to the mean type of strong bounce will follow in the next days or a couple of weeks. I started to establish long positions for some days and today I added more expecting for a strong snap back. Although I did not catch the exact low today as I could not watch the market closely during the day, I did manage to add more long positions when S&P dropped below 1840. They already turned to good gains when a significant reversal occurred at the last hour. By the way, some of my naked puts sold last Friday have already shown 30-50% gains just within 2 trading days. This is how powerful to trade for income for quality stocks during high volatility by using the odds in favor of you with much higher time premiums that others were willing to offer at panic.