Tuesday Update: Explaining The Inexplicable

The 1% market decline today is being attributed to the heating up of the potential for a shooting event on the Korean peninsula. If that were the true explanation for a market decline, than 1% would be a drop in the bucket considering the financial ramifications. Shots across the bow, or missiles above Japan, have an ominous snowballing potential to end life on this planet as we know it.  Is this market so strong as to only shrug off 1% in that scenario? 

Explanations of market behavior are about as accurate as those N. Korean missiles, i.e., not very. (But that's a reason to be even more worried.) It's better to trade what the market is doing than why it is doing it. Toward that end there are two trade models that merit our attention going into Tuesday's close:

GBTC: A 5% drop in Bitcoin has caused GBTC to fall 25% off of last week's highs and has resulted in it dropping to trend line support at $740. Aggressive traders can buy GBTC anywhere above $740, while using that level as a stop. If the stop is hit at the close, exit and go back to cash. This would be a low-risk trade even for this very volatile ETF. Be disciplined on both the entry and exit here. 

SPY: We were stopped out of our SPY puts last week, but neither the Dow nor SPY were able to break above their Buy reversal thresholds and both appear to be breaking down again. Aggressive traders can re-enter this trade so long as this decline (or a major part of it) is not erased before today's close of trading. The Nov $240 puts which were the original recommendation are trading at $3.75. As an alternative, the Nov $245 puts are trading at 5.70. Either represent a good re-entry into the trade, the former a bit more aggressive than the latter.