Rona Part 2?

 Going into the end of the year, what else, but the Rona to provide the last bit of volatility for this crazy stock market.  You just had your casual 120 SPX drop from Globex open to the premarket lows, on nothing more than some fears of a Rona variant that is causing a little panic out in Europe, again  (remember late October Europe 2nd wave fears?).  And they agreed to the $900B stimulus deal.   And they also pumped the financials on Friday after hours on the Fed pouring more gasoline on the inferno by letting the banks buyback stock.  

So a classic bad news following good news situation, where they aggressively sold the positive news, and Europe joined the sell party thanks to Rona fears again and you get a panicky plunge from 3680 to under 3600 in just over an hour.  

This is NOT your typical post crisis bull market, it is a hyper volatile chase for performance, as the hedge funds are at 99 percentile net long exposure along with mom and pop pouring money into equity funds after the all clear post election.  

So how to play this?  With Christmas and New Year's just around the corner, any post opex hangover that you see today will not last for long.  Those that want to sell size and reduce risk have probably already done so earlier in the month.  The yearly performance is strong, so its hard to get fund managers to de-risk in a panic over worries about being down on the year.  This looks like a decent buy the dip opportunity, with strong support below at SPX 3600, and above that, SPX 3630-3640 area.  Also, gold and bitcoin are strong, so you don't have much collateral damage here.  I did a little buying in the premarket and may buy more during the regular session.  Not looking to hold for long, maybe a few days to catch a relief bounce.  Will definitely sell before the end of the year.  

In an optimistic market, you get these occasional plunges lower to trigger all the sell stops from fast money longs, to cleanse the system, for the next move higher.  The first couple of dips are worth buying, when the dips start to become more common, it gets more and more dangerous buying the dip.  Right now, we're not at that danger zone.  The market still hasn't given enough opportunities for latecomer bulls to buy, so it should still be relatively safe to buy.  

It is interesting that they use computer jargon to describe these Rona mutations, they are calling this new virus a variant that is 70% more contagious.  At this point, the market is still expecting the vaccine to eliminate all future Rona fears so it will probably look past this little hiccup in the road to normalization.  Now if there was a problem with the vaccine showing serious side effects, that is a more serious issue, but this just looks like another Rona scare that eventually goes away and is quickly forgotten.

Leaning long today into next week.   With the renewed Rona fears, I like Nasdaq over SPX until year end.