MARKET STRATEGY

ALL long term (Core/Trend) shorts will stay the same.

I think this base we expected to form this week as of last Friday is real, I do not think it is coincidental with the F_O_M_C today. Therefore, I suspect there's a leak. There may (or may not) be a knee jerk reaction that is negative at first and then goes positive.

I have several SHORT TERM 15,30MIN POSITIVE DIVERGENCES IN THE MARKET. 

As such, I'm going to move some of the TRADING positions (only) and maybe some quick option positions to a more long leaning stance. Remember three things...

1) There's only about 2.5 days in potential base, that means I don NOT see this as a change in underlying trends, long term positions I'm still bearish. As I often use as an analogy, "You can only go so far on a half tank of gas" as it relates to the 2.5 days of base.

2) Even though you can only go so far, the market's underlying trend is very bearish, almost every other asset is already is a clear, definable downtrend and as such I'd also say the market is even though the actual Dow trend would not call this a bear market. The point though, THE MARKET DOESN'T DO ANYTHING WITHOUT A REASON. Therefore a bounce has a reason and it's not the technical "oversold" argument. For the bounce to fulfill it's purpose, IT MUST LOOK VERY STRONG, IT MUST OVERCOME ANY BEARISH BIAS AND CONVINCE EMOTIONS TO SWING BULLISH. That means it would need to be impressive and in the type of market we are in now, volatility will be high. Remember BEAR MARKET rallies are the strongest rallies you'll see for this EXACT reason, they must overcome the inherent bearish bias and swing emotions around and convince traders that the move is real, thus they are very strong.

3) The real underlying trends across all asset groups is very bearish, a very broken market so as hard as it might be emotionally, we want to use any price strength to short in to.

I wouldn't blame anyone if they wanted to just sit in cash or on the sidelines for a potential bounce move in the market, the market is at a very negative, slippery slope (the AAPL lesson), However, the bigger picture and the reason for a bounce would be to take advantage of the bigger picture set up. As I said, the market doesn't do anything without a reason and if they are setting up a bounce as it seems off this 2.5 day base as we suspected would happen last Friday, then they have a reason for it. THE BOUNCE IS TACTICAL, IT CREATES MOVEMENT TO SET UP THE LARGER STRATEGIC PICTURE. I WOULD SAY IT WOULD BE 90+% THAT SMART MONEY WHO CREATED THE BASE AND A LIKELY BOUNCE TO COME FROM IT, ARE GOING TO USE IT FOR THE SAME REASON I WOULD USE IT, TO SELL ANY LONGS IN TO STRENGTH, EVEN ONES COLLECTED THE LAST TWO DAYS AND TO SELL SHORT IN TO STRENGTH.

So I always try to lay these things out BEFORE hand to help ANCHOR EXPECTATIONS so you don't react emotionally, so you know what it likely to come and why so you may use it to your advantage, still some of you will feel the emotional pull of a move such as the one I suspect is coming, even when expectations are anchored BEFORE HAND, this is Wall Street doing its job, to move emotions of people who know what to expect and have charts laying out the big picture, that's how effective they can be at playing on the two forces that move the market, GREED and the stronger, FEAR.

So understand this is tactical planning, anything that comes from here on out. Unfortunately I'll have to turn on CNBC for the only time I watch it, F_O_M_C.

IN MY VIEW, Q'S AND IWM LOOK THE BEST SHORT TERM, SPY LOOKS THE WORST.

ALTHOUGH I'LL LIKELY CLOSE SOME SHORT TERM SHORTS, FINANCIALS LOOK BAD AND EVEN THOUGH THEY'D LIKELY MOVE WITH THE TIDE OF THE MARKET, I JUST DON'T HAVE THE SIGNALS RIGHT NOW TO CLOSE FINANCIAL SHORTS, THEY JUST LOOK THAT BAD.

IN MY VIEW, ALTHOUGH SHORT TERM VIX FUTURES SHOULD TRADE OPPOSITE THE MARKET ACCORDING TO THEIR CORRELATION, THEY JUST DON'T LOOK GOD FOR A SHORT, I THINK THE REASON IS THAT PROTECTION WILL BE BID, EVEN IN A MARKET BOUNCE AND THUS THEY WILL LIKELY HAVE BETTER RELATIVE PERFORMANCE THAN THEIR CORRELATION WOULD SUGGEST, THEREFORE I LIKELY WILL NOT SHORT ANY VIX PRODUCTS.

From here on out, I'll just be calling out some short term Trading positions, whether closing or opening.