We had one of those delayed reactions to North Korean headlines on Thursday. On Wednesday, when the headlines were all over the news, the market gapped down and worked its way back to nearly flat on the day, giving bulls confidence that the worst was over. Then we got the surge of selling in the indices and an unwind in short VIX trades. Now we are near that 2440 support that I mentioned before. It is sturdy support and it is probably good for a bounce here over the next few days. I haven't gotten long yet but may put in a small long position either short VIX or long SPX going into the weekend.
I am sure people think that its crazy to be long over the weekend with all the possibility of nuclear war but I am playing technical levels and the fear after just one big down day was palpable. CNBC Fast Money were uniformly bearish and looking for a deeper pullback. It could happen if you see further volatility unwinds, but that is low probability. Not going to go crazy buying the dip here, but will probably go in small and look to see what happens next week. If we go down some more, I will probably buy more. These are short term swing trades. Don't want to do anything long term here.
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