Tactical When I Want to Be Strategic

“I have two basic rules about winning in trading as well as in life: 1. If you don't bet, you can't win. 2. If you lose all your chips, you can't bet.” -Larry Hite

Into the opening gap down this morning, as much as I wanted to press for an imminent washout, the nature of the current market saw me covering up an AMZN short and trimming a triple-bear semiconductor (SOXS) ETF. While bears may very well pull off a bloodbath throughout the rest of today, the reality is that bulls are unlikely to give up with their multi-quarter successful strategy of buying when the market seems most vulnerable, which has handsomely rewarded them since the March low. 

In last evening's full video for Members, we discussed the concept of diminishing returns and how that applies to the current landscape. Bulls have failed to make very much progress higher since the selling began just before Labor Day, but they have not been brutally punished, either. Hence, it would not shock me to see them continue to give it the old college try until they are properly scared straight, if that is what is in the cards. 

An aloof VIX and VIX ETF product line is also adding to the risks of the current market, although I recognize there are colorable arguments to the contrary regarding the VIX perhaps having a lid on its upside through the Election. 

Either way, for the rest of today and this week, if bears hold the large cap QQQ ETF below $271, prior support, the next logical level to breach is $267, the lows from last Friday.

On the updated QQQ daily, below, you can see buyers trying to defend it this morning. Until we see the floodgates unleashed for more meaningful selling beyond a soft opening bell, I am staying tactical even as I want to be more strategic.