Marketlicious

So this is the third post of me calling for a pullback of the current rally. Reasons after reasons that I gave, and yet we have not seen a meaningful correction yet. To me, it was disappointing but still I have to accept it. Yes, I took loss on my April Bear Call position.

So we have seen a six week rally and what now? No doubt, in medium term, this is a bullish market which I mentioned earlier. However, in my mind, the overall market is still bearish, a long term view. Perhaps, that is why I was defeated by the bull. I was anticipating a significant pullback day after day, only to see the market making higher high day after day. Even Bear Calls position which I consider a safe strategy got hit. Yes, the bear lost but at the same time, I am still sticking to it. I think it is too late for me to shift to the bull side considering the risk reward ratio.



Looking at the chart of SPX above, we can see a formation of a rising wedge which is a bearish sign. Yeah, of course this call for a pullback might fail again and therefore, I do not have any open position (except for some Bear Calls) until I see a strong confirmation of a pullback. Any break below the wedge with high volume and long solid red candle would be the trigger to the downside. Meanwhile, looking back at the VIX on March when the rally started, SPX is actually trading very close to 2 standard deviation and this is the reason behind the entry of my Bear Calls position.