I've received a lot of emails this morning related to the market trading up after such a bearish move last Friday. These post sell off rallies are very normal. Back in 2008 when the market dropped 700 points in one day during the financial collapse, the market rallied about 500 points the next day. We don't get scared by the rally unless it reverses the previous sell off. In other words, as long as the market doesn't rally to a new high within the next day or two, we'll assume that this rally is a set up for another move lower. You have heard me refer a lot to the price action from last April. If you notice the day that the S&P finally closed below its 10 day MA, you will also see that it rallied back up a bit over the next two days. However, that rally failed to push the market higher and the sell off continued. Today's rally should be light in volume and the VIX shouldn't move down very much. For those brave enough, you could use today's rally to buy more puts. For those that want to play it safe, you can buy more puts when/if the market starts to sell off again.
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