Might See that 1270 Today, After All

First whiffs of panic in the air. Ironically the stuff that was pole axed yesterday is holding up well today (financials and commercial real estate). So I am not deriving much benefit from my Ultrashorts there. These sectors just might be "sold out" - i.e. anyone who is going to sell is pretty much out at this point. We saw the same pattern in mid January when everything was selling off yet financials, homebuilders, and retailers were showing relative strength. This development makes things tricky because unlike yesterday my Ultrashort exposure is not providing very much value, in those 2 names at least (Real Estate, Financial). So it's a much rougher day than yesterday when those instruments were up 8-9%. We went through the exact same conundrum in mid January when I could find nothing in the Ultrashorts to offset the damage in the long side.... this is the problem with only being able to buy ETFs on the short side. Sometimes you need a hammer and all you have is a screwdriver. Similar situation forming it appears.

Seeing the strength we have today in those 2 groups (relatively) and assuming they are close to washed out, I will be cutting them back this afternoon with a pretty serious haircut, especially as we break below S&P 1280, on our way to S&P 1270. I do expect the Plunge Protection team to be hitting the "buy" button hard and fast and defend that level at all costs.... so we could get a vicious bounce once we get there. Either way I will be curious what they have up their sleeve Monday in premarket with futures.

By end of the session I'll probably be selling half or more of my exposure to both these positions ...

Long Ultrashort Financial, Real Estate in fund and personal account