While the S&P 500 SPX has been consolidating since the August lows, JC Parets sees a sharp breakout ahead. But the direction remains unclear.
“…the longer the consolidation lasts, the more violent the ultimate move becomes when the battle between bulls and bears is ultimately resolved.” Parets wrote on Trading Deck.
“A breakdown below 1100 would mean a victory for the bears while a breakout above 1230 could mean the lows are in and stocks are heading higher.”
For bulls, Parets suggests calls on the VIX VIX to hedge market exposure. For bears, convinced the market’s heading lower, he suggests puts on the VIX to hedge against a rally.
