Here are trading recommendations for a weak market.
The sentiment picture is bearish. The small option traders have been assuming excess risk by paying high prices for call options. This number was at an historic high before the September correction. The correction dampened their bullish enthusiasm, but they resumed their call buying. The professionals have taken the opposite strategy, reducing their long positions. This is a bearish mix. The bullish side of the ledger is limited to the coming week. The period from October 30th through November 6th is the period of end-of-month strength for October. The index has risen in 69.2% of such cases, the 3rd highest of all EOM periods. The average return has been 0.85%, so the expected return has been the highest of all 12 months.
