I Am Flat for the Moment

I have flattened all positions for a moment and am in cash.

IF we’re coming out of a major low, we should produce a powerful rally (we still may). But, there’s an ambiguity here that I want to be cautious around.

If we draw the trend line support we’re at from the June and September (green arrow) lows, we’re just above it in a little bullish wedge:

SPX

However, we already tried to break out of that little red wedge this morning and it failed, and that might be weird. And furthermore, if we re-anchor the trend line back to the June and July (green arrow) lows, you can see that we’re consolidating under it. And if that’s what’s going on, a failed bullish wedge under support would be terrible.

SPX

So, I’ve closed the bull put spreads, closed the long calls and I’m going to watch for a bit. I don’t know which of these versions of the trend line matters. Given the capitulation-like nature of the major decline of the other day, I would expect a rally, but the little wedge failing this morning made me nervous. Here’s what that looks like zoomed in (using the June & July lows):

SPX

So, I’m content to observe for a moment.


[UPDATE 9:53 CST]: I noted in the Discord that I have taken some puts. So, that’s my only position for the moment.


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