If you followed the morning plan, today was textbook of the 30-min breakout range I described. Strong internals, strong breakout, but to me it is a shorting opportunity as I believe that the trend is now down.

If you are in the bearish camp, as I am, this is where you can start to short the market. You can buy at the money puts, as I will. I am starting here. I am starting with the S&P 500, but you could get more bang for the buck from the NASDAQ 100. If either index goes higher, you can do more but start conservatively. Your stop is a new closing high in either index. You can go out to the July 16th monthly expirations or beyond. July 20th would be a perfect candidate for the 18-month cycle trough – but calling it to the day is nearly impossible – but it is in the zone. 

After the first down leg (which I believe ended Friday), you can expect the market to retrace most of it before it rolls over again. Call premiums are still high if you want to sell calls, but consider a vertical spread so you have some protection. I am not a fan of selling a naked call.

As in life there are no guarantees. When you buy a put, your risk is what you paid for it. As always, remember I can be wrong and certainly have been wrong at times. You have to make your own decisions.

Start slow.

A.F. Thornton