After 3 gap up and go days, we are looking at a pretty good gap down in the major indices as I type a little before 8 AM Eastern. The big question that everyone is asking is whether we have put in a bottom or is this just a bear market rally. I lean towards the latter until the market proves otherwise. Bear market rallies tend to come off of a new low and are swift and strong. This pretty much is a textbook one so far, and unless technicals tell me otherwise, that's how I will treat it. It is also worth noting that the SPY is in an ascending wedge that could very well be a bear flag. I will continue to watch the top and bottom trend lines of this wedge as potential resistance and support levels.
Yesterday as the market was starting to show some signs of slowing at the upper trend line, I took a swing trade in FB puts, and as I type it looks like this should work very well. I also took partial profit in RCL puts yesterday, and it looks like we should get some good follow through here this morning. This should be working even better, but there is some debate as to whether Congress will include aid to cruise lines as part of the next aid package. If that starts to look less likely, it could go much lower and the puts would go much higher. For today I will be mostly focused on day trading, but I would possibly be interested in some short setups in AAPL, MSFT, AMD, or NVDA on any rallies that meet resistance should that setup. For longs, I will be watching PTON, WORK, and CLX to see if they give a soft open and hold support. Stay safe out there everyone.