Here’s my take on the current market action and how I’m trading it.
Notes
Bear Market Best Practices
Charting Tips
High VIX
Fool Me Once: Lighten up on bull positions into strength so I don’t get hit as hard if we rollover again.
Fade the Fear Trade: Oversold market + VIX spike to 35/40 = sell puts or bull puts
I do not like chasing strength here. If we bounce a 2nd and then 3rd day and you’re entering new bull trade – I’m not excited about that.
then Bear Retracement
Trade Management
Trade (I bail if I’m wrong)
Investment (I don’t usually bail if it goes against me, because it’s a long-term play)
-Proper sizing. Drawdown < 10% of account value.
Phoenix Examples
We entered this drop with all bullish positions.
-Long-term stock positions
-VZ, sell calls
-DIS, starter position.
-Core monthly naked put: EEM – I could have exited this at breakeven if I needed to reduce portfolio risk.
-Core monthly naked put: Jan $203 naked put for IWM. Exit Thur morning at gain. We used an intraday bounce to exit a naked put at a profit.
-New Trade: Sell new OTM naked put (Fade the Fear): Sell Feb $185 naked put for IWM.
-Smattering of stock positions with naked puts: CLF, KBH, FCX, XLE, XLF
– Add size at higher credits to recoup losses quicker on the bounce.
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One Reply to “Tales of a Technician: How I’m Managing the Bear Market”
Great video, real gems in this one on how and why to weather a draw down, some ideas on what to do to mitigate some pain.
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