Options: 5 Reasons to Beware of the Bear Market

Posted On October 22, 2018 2:52 pm
By: Steve Smith

Source: freestockcharts.com

As the saying goes, the generals can lead the charge, but if none of soldiers follow, they will soon beat a hasty retreat.

This seems not only to be true of the overall U.S. market vis-a-vis the rest of world. But also within the U.S. market itself.

It had been large cap technology leading the indices higher. But, they had been going higher on narrow leadership. In fact, the bulk of stocks had already moved into down trends, and the number of issues hitting new 52 lows was the highest in nearly two years.

Source: jlfmi.tumblr.com/

This loss of leadership has led to investor outflows with tech funds seeing their largest withdrawals of the year last week.

Source: BofAML Global Investment Strategy, EPFR Global

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Tagged with: options trading

About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.