Resistance Is Strong – Market Looks Ready To Roll Over. Prepare To Buy Puts

Posted 10:30 AM ET - By now you should know all of my reasons for being bearish. If not, read my comments over the last five days. I bought puts this morning and I'm adding at SPY $186, $184.50 and $183. Five-year bull markets die hard and I will be scaling in on weakness. Google, Apple, Facebook, Qualcomm, Microsoft and Amazon could not move the needle. The market barely challenged the high yesterday and sellers started nailing bids just after the opening bell. Now that most of the "darlings" have reported, the market has lost some of its firepower. Profits have been flat and stocks are trading at a fairly rich forward P/E of 16. Retail sales barely eclipsed the inflation rate, housing starts were down 14% and jobless claims rose to 329,000. The pent-up demand theory is in question and major economic releases lie ahead. If we do not see more than 200,000 new jobs in April next week, I believe the market will correct in May. Chinese banks will start reporting earnings and I suspect loan defaults will be up. Fiscal stimulus plans will take months to bear fruit and economic conditions will continue to slip. Given the Fed's game plan, interest rates should be rising. They are declining and that suggests a flight to quality. Reduce your portfolio risk by selling some of your stock or buy some protective puts. TIME IS RUNNING OUT From a trading standpoint, scale into put positions. Be patient and use the all-time high as your stop. If you add at the levels I've outlined, use those same levels to stop the position out if the market reverses. Trade well . .

Daily Bulletin Continues...