Monday's Big Reversal

Today the SPX gained all of what it lost on Friday and some. It bounced off its lower Bollinger Band line on the daily chart and never looked back, creating a bullish engulfing candle. A simple target for the short term would be the middle Bollinger Band area, around 2070 currently. This is also where the market gapped lower to start its two-day run last week. That gives another 22 points or about 1% potential upside.

VIX was in spiking mode, and technically still is until it closes below 17.80 or thereabouts. Today it closed at 18.16 so a bit more stability is needed. The big news is that on Friday the VXST (short term VIX) traded higher than the VIX, and then closed lower today. Usually, this can be seen as precursor to more volaitility, though not usually immediate. If VIX now closes below 17.80 we are likely to see another 21 trading day bullish period that takes us through the bullish Thanksgiving holiday period.

The 2015/2005 bull put spread trade is now trading for about $1. I will need to roll this up to higher strikes, if the market goes back into bullish mode. I will also be buying leveraged ETFs, TNA and TQQQ.

The selling of last week has evaporated quickly. A bullish options expiration's week is likely followed by a sell off early next week to set up the post-Thanksgiving day rally.