Fear Rips the Markets

The hangover from hawkish fed comments last week combined with elevated fears over Italian debt is resulting in a 23% increase in the VIX.  This elevation of fear is happening with the market in a short term overbought position and with most stocks starting or continuing to trade below their 7 day moving averages.  My short term indications point to another 20-30 points lower on the SPX before this correction is done.  I added FDX puts today to go with my VALE calls.  My FCX calls have little value so I do not plan to move on them but rather let them ride til there is a small pop.  The FDX gain is $5000 so far today while the option values of FCX and VALE are relatively flat.  I have some cash to play with but instead of pushing the gas on the short side of the market, I am going to look to liquidate FDX in the morning and await a chance to play calls when the market bottoms.  For now, as long as the US dollar stays strong, stocks are not likely to bottom soon.  Any reversal in the UUP will likely signal a market bottom.

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