Is This a Bull Trap or the Start of a Rally?

Here's my two cents on it.                                                                                                                                                                                                                                                                                                                                                                                                                 August 08, 2024 | [Read Online]( [fb]( [fb]( [fb]( [fb](mailto:?subject=Post%20from%20Don%27s%20Trading%20Desk&body=%20Is%20This%20a%20Bull%20Trap%20or%20the%20Start%20of%20a%20Rally%3F%3A%20Here%27s%20my%20two%20cents%20on%20it.%20%0A%0Ahttps%3A%2F%2Fdon-kaufman.beehiiv.com%2Fp%2Fbull-trap-start-rally) Don Kaufman here. Today, we saw the S&P 500 rip higher by 2.3%, marking its biggest single-day gain since November 2022. Now, if that doesn't scream "Jekyll and Hyde market" I don't know what does. After sinking well below the weekly expected move, the SPX has rebounded and now approaching the top of the range. As for the VIX, our trusty fear gauge, it took a nosedive, plummeting 14.5% to 23.79. Let's break this down, shall we? First off, we're witnessing what I like to call a "rip your face off rally." It's the kind of move that leaves bears scrambling and bulls grinning from ear to ear. But don't be fooled, my friends. This is textbook volatility behavior. Now, you might be thinking, "Don, does this mean we're out of the woods?" Not so fast. At TheoTrade, we're still firmly in the "markets are headed lower" camp. Why? Because rallies like these are often just pit stops on a longer downward journey. Now, let’s talk some individual names, specifically META for a second. [I had a lovely 30% winner on it yesterday, utilizing my In/Out Strategy.]( This tech darling is practically untouched in all this chaos. It's like a sitting duck, just waiting for the right moment. If you're looking for short opportunities, META might just be your golden ticket. But I wouldn’t short the stock in this market, nor buy puts when volatility is this high. [Instead, I would look to utilize this strategy.]( Sure, it was an exciting day for the bulls. And I do think today’s rally has a chance to continue for the next couple of sessions. But here's a crucial point I want to hammer home: The VIX doesn't need to break new highs for markets to head south. In fact, most markets bottom well after the VIX peaks. It's like the calm before the storm…deceptive and potentially dangerous. Remember, in times like these, it's not about predicting every little move. It's about understanding the bigger picture and positioning yourself accordingly. So, what's the play? [Keep your eyes peeled for those in-out spreads we talked about yesterday.]( Define your risk, scale back your size, and for heaven's sake, don't try to be a hero by catching every swing. The market's giving us a wild ride, folks. But if you can learn to embrace this volatility instead of fearing it [like I mentioned in yesterday’s video](, you might just find some incredible opportunities along the way. Stay sharp, stay nimble, and most importantly, stay tuned. This rodeo's far from over! To your success, Don Kaufman P.S. Some strategies work better than others under different volatility regimes. If you want my honest opinion, [click here to find out the best strategy for this market.]( [fb]( [tw]( [ig]( [yt]( Update your email preferences or unsubscribe [here]( © 2024 Don Kaufman - TheoTrade PO Box 24790 Christiansted, Virgin Islands 00824, Virgin Islands, U.S. [Terms of Service](