What a revenge today!
As I said a few days ago, I thought the market was extremely oversold and could rebound strongly very soon, probably early this week. We got just that today, the first day of the week. Anyone chasing the market down with aggressive shorting late last week is getting slaughtered today. On the contrary, those who dared to buy (me included) in front of the end of the world sentiment are richly rewarded. I have been especially aggressive in shorting VIX actually when it jumped almost 50% within one day. Although seemingly quite risky to short VIX, the reward is really great at good timing. After all, VIX rarely stays very high for long and it always comes down pretty fast after panic hits hard and then subsides. You just need to know when and also how to manage the risk with manageable position size, if VIX continues to go high in the short term. VIX plunged almost over 20% today and UVXY got haircut by 26% as well.
The question is, are we done with the dead cat bouncing? Given how oversold the market was last week and the strength of today's bounce, I think we may see more upside in the short term. S&P may go towards 2490 before the rebound is completed. VIX may likely go below 10 again in the course and UVXY will likely move down towards mid or low 30s in the weeks ahead. Of course, this is all in the context of no new serious geopolitical crisis arising. If that happens, we will see another nosedive much sooner than I can predict.
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