As for right now, as suspected, VXX / UVXY are pulling back a bit and that's fine, I'd much rather run a full position size, but I want to do it smart and phasing in like this is actually part of my risk management. The same can essentially be said about the FAZ long entered as a half position size.
My gut feeling is still that the market is in an area in which it will likely open close to tomorrow to execute an options expiration pin on all 4 option classes that all expire on quad witching. I'd expect the same general principles to be in effect, most contracts should be wrapped up by about 2:30 or so, we will likely see a pin (they do move as the open interest changes through the day) until 2:00-2:30 and then the market does whatever it wants. In my experience what happens after 2 p.m. in price has very little bearing on how the new week opens, but the 3C signals over the last 2 hours of Friday tend to pick up right where they left off on the next day of trade, even over a long weekend so I'm more interested in the 3C signals the last two hours of tomorrow than price, price is deceptive, it's a billboard at this point.
We also have window dressing coming near and end, I haven't looked at a calendar for the exact date, but the rule of settlement is Trade Plus 3-Days, so that's about when all of the window dressing has to be wrapped up and then half days, etc. all play a part as they want to wrap it up while they are there, not one a half day that they can turn in to a 4 or 5-day weekend at the Hamptons.
My personal position right now is patience. I was going to post a sample of all the averages, but the IWM is a good proxy even though each average is different, the same idea applies.
To me it looks like intraday steering of price while larger distribution is taking place.
As for Leading Indicators, HY Credit is underperforming on the day, HYG Credit is underperforming significantly but we saw that in 3C yesterday. VXX is outperforming the correlation, again we saw that late yesterday. 5-year yields popped as the 5 year sold off so the SPX is at regression to the mean right now , today with Yields so there's no magnetic force there short term, longer term it's down.
Sentiment indicators are split, one is in line, one is VERY negative.
That's about it.
This isn't the kind of market in which I want to try to guess what will happen although I have my opinions, so do people playing Black Jack who want a hit, I want objective data. We do have a lot more than yesterday, it's leaning the way I suspected, but it's not enough to really go hog wild here. Being patient or on the sidelines is a Position too.
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