I recently added some FDX puts but it is a small position and not representative of my market bias. Today, there are a great number of stocks pushing back above their 7 day moving averages as the market is erasing all of Monday’s losses. I maintain a bullish trading bias, but this move is a bit sudden and happening without a major pullback in the US dollar. For these reason’s I am slightly suspect of today’s rally. My FDX trade is a short term trade that will take advantage of a potential reversal of the market into the close. If the market reverses into the close and many of the stocks that are now above their 7 dmas fail to hold the average into the close, I will look to add more downside exposure. If the market gains hold, I will use the next few days to build some bullish positions to ride over the coming weeks.
The market is moving with volatility over the past few days and the pullback has been rather shallow relative to historical pullbacks. If the market starts to set new highs, the strategy will be a simple one of buying stocks hitting 52 week highs and riding the wave. For now, risks on both sides remain high and my FDX trade is a short term play with low risk that will pay off if the market decides it needs a more normalized 3-5% pullback.