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Category: Dr. Duke's Blog
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The intraday trading pattern of today's market was almost identical to yesterday's: higher at the open, then trading off with a rally into the close. One sign I interpreted as significant was that the VIX was declining even as SPX traded down this morning. SPX opened up at $1928 this morning and traded up to $1947, but almost immediately began to decline, reaching the low for the day at $1914 around 2 pm ET. Then the market rallied over the last 90 minutes of trading, closing at $1939, up $15. Today's open and close on SPX were back within the Bollinger band.

RUT traded similarly, but less bullish, closing up $3 at $1045. RUT's candlestick was a near perfect doji, the sign of balance between buyers and sellers, often signaling a trend transition. The VIX lost two points to close at 22.3%. That is a decline in volatility of about five points in two days - another signal of transition. Trading volume remains elevated with 2.9 billion shares of the S&P 500 stocks trading; the 50 dma is 2.4 billion shares.

The February position in the Flying With The Condorâ„¢ service is near break-even; at one point today, my position was actually profitable. The partial hedge is doing its job and buying us time. I closed the January position for a 13% gain, so we are off to a good start in 2016 in spite of all of the hysterics in the market. The cable business channels are dragging out all of the extreme bears. Their message is simple: "sell everything; buy a tent and move into the woods.". Fear sells.

I don't mean to be cavalier; this remains a dangerous market. But I put my money where my mouth is. I bought SPX calls yesterday and added to that position today.