I have been warning for the market risk in the past two weeks or so while the market was stubbornly lingering around its all time highs, refusing to give back anything meaningful. But my crystal ball, the VIX options, is rarely cheating me with the calls persistently more expensive than the puts along the way. Well we got a harsh selloff today with a panic attack intensified dearly due to the thin volume of the market during the holiday week. This has become the best gift for me for Thanksgiving. Actually we got two gifts for our DW Family via betting for the upside for VXX and TZA, both as inverse EFTs going in the opposite direction from the market.
Now my crystal ball is telling me we are likely seeing the bottom of this mini correction. The panicky selloff today is pushing the market deeply into the oversold condition, which may mark the starting point for the year end rally, or the famous Santa Claus rally. I tend to be early but I'm confident it is a wise move to bet against the herd even if my timing is bit off. So I'm going long now by using a strategy that is likely one of the best with the lowest risk to bet for the SC rally: betting for a downtrend for UVXY!
Happy Thanksgiving Weekend!
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