![]() ![]() ![]() Marketeers, Fed Regulators, and my know-everything neighbors are running in circles. Market crash, deep recession, deep Geopolitical/Sociopolitical issues. Short Strike Prob-OTM (85% +/-) depending on market conditions. The S&P 500 Put/Call Ratio is near or above 1.0. The VIX is mostly above 25% and is trending up. Geopolitical/Sociopolitical issues have legs and may continue for some time. So things are agitated, and there is a lot of worrying. The DOW has collapsed more than 1,000 points several times within a short period of time. 2Ī precursor to DEFCON 1, the broader market has been in a Correction for a number of weeks/months. Open Spreads between 10-20 strike-width each. Short Strike high Prob-OTM (85% or more) for both Put and Calls. Close winning position early if possible. Therefore, only consider low-risk positions, if any. The markets may have had a mini-Correction. The VIX is oscillating around 25%, and the S&P 500 Put/Call Ratio may have spent time between 0.75 and 1.0. Marketeers are in a high state of jitters due to unexpectedly bad economic data, poor corporate earnings, or a national event that may last for a while. Short Strike Prob-OTM (85% +/-) depending on market conditions Therefore, I will enter new positions with caution and keep a vigilant eye on the market condition. The S&P 500 Put/Call Ratio solidly oscillates about 0.75. But the VIX is most likely near or under 20% for several days. The VIX may rise (if coming from DEFCON-5) or slowly fall (from DEFCON-3). Minor market jitters over menacing Geopolitical news, ominous Governmental actions, or unexpected corporate events are causing the broader markets to drop below Support Lines for several days in a row. Open multiple spreads with narrow Strike-Widths. Let ride any Bear Call Spreads already at max-loss (Long Strike in ITM) – I can’t lose more. At DEFCON 5, I will assume no restrictions to any new positions. Consumer Confidence is high, and there are love and peace throughout the world (snort). The latest economic data are all positive, and most Geopolitical and Sociopolitical news is boring. VIX is below 15, and the S&P 500 Put/Call Ratio is below 0.5. The 5 levels of the DEFCON Trade Readiness indicator: DEFCON At the end of the Market Sentiment Section (below), I will compile everything in that section into a single DEFCON level between 5-1 – with DEFCON-5 being the elusive “all clear” signal for opening new positions and DEFCON-1 signaling a complete market collapse. Going forward, I will display a DEFCON level for each journal entry for that week. ![]()
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