I just started my short-the-market program by purchasing PUTs on RTH (retail ETF) and DIA (dow jones industrial ETF). Foundamentally I agree recent rally’s of the sucker type but who knows, rallies of this type could last longer than it should be (or what we bears want it to be) so I’m going to layer in my trades to average it out.
I picked RTH because I believe the negative savings rate coupled with end of the HEW game means consumption has to slow at some point. Technically over the past few years it’s been trying to break $100 but never did in a meaningful way. It’s now at around $98/99 and I’m betting history will repeat itself. For DJI, it’s crafted a nice uptrend since a few months back and it’s currently at top of the channel so if I’m wrong it gives me some degree of protection. Was going to do same for SPY as well but it just didn’t hit my price target.
Next time I PUT more will probably be either 1) up trends’ clearly broken on the downside or 2) rally continues after a small dip and I’ll jump in again at top of the trend line.
