Just as Things Seem Most Bearish

By Sang Lucci Uncategorized

By Sang Lucci

Red was the theme of the previous week, and with the terrorist attacks in France, many expected at least some bearish continuation. We did keep selling off after hours on the indices last Friday. But when we saw SPX Futures up sharply from those lows, sentiment no longer felt bearish at all, let alone crash worthy. As the day passed, the possibility of a strong turnaround became a certainty, with hope originating from some bullish AM sweeper action.

These options, which were worth a cumulative value of over $4.6 million in premium, exploded in price, as can be seen from the chart below.

At the close, these option that were purchased at $3.09 saw a B/A of $3.99/$4.05.

As the day passed, further bullish index bets were made:

When things look the worst, the move down is likely already over, and that was clear today with today’s squeeze of last week’s bears. Always allow yourself to clearly read what the flow is telling you, and never fight sentiment.

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About the Author

Sang Lucci

Sanglucci.com has been one of the leading trading education resources and communities since it's founding in 2010. Sanglucci.com has trained thousands of traders through its unwavering transparency, singular expertise in Tape Reading and options strategies, and it's game-changing partnership with the infamous Wall St. Jesus.

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