The majors started the week reversing the downward trend of last week. I was worried about a further sell-off last Sunday night. The rebound was very strong. SPX and RUT made continuous three-day gap ups. By Thursday, SPX made a new ATH of 3348 which was a 120 points move in four days. RUT made an 85 points move for the same period and retest the breakdown area of two weeks ago. Then it came to a small selloff on Friday. The majors were falling down after a better than expected NFP report ( 224K vs 154K expected). ES and RTY closed down -0.67 and 1.4% respectively. It was a really tricky movement for the week. The MACD is turning up in the daily while turning down in the weekly chart. But there are no crossing on either. It's hard to tell the market direction right now. The 20-year seasonals are showing a choppy to slightly downside movement.
My portfolios are pressured further by the week's reversal since I had to reverse a long put to a short call during the selloff a week ago. My net liq is 110Ks, barely above the board line. The leverage is also around 5.5. It's too high above my target of below 4. The delta is balanced but won't be able to stand a more than 1% move up or down.
I have come to realize that I need to aggressively reduce my options sizes. Since I had more long puts during the first part of January's surge. I was able to pill off more long puts. But the selloff on January 24th locked an extra long put in each asset. The wild movements of the last two weeks weakened my net liq. I have to hold the net liq lines and reduce margins by reducing sizes right now. I may look for other ways to recover the losses late. The key is to survive first.
Greatness comes from the ability to get out of bad trades!
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