SPX Still Bid

Good Morning,
"Less Is More" is my attitude. Volatility is heading for the teens, the SPX is headed for 1300 and every time the equities drop, buyers come back in.
As you know, I preach a conservative approach and look to generate income off my holdings, profit from market volatility and protect my assets when needed.
I also preach that the markets tell us what to do. Right now, the markets are telling me to back off the protection and back off the aggressive growth trades. With the VIX heading towards the teens and the SPX rallying in the face of MANY adversities, it is pretty clear that standing in the way of the bull market in SPX can be quite deadly.
Yes, I am still protecting, albeit lightly. Yes, I am still generating income, but I am prepared to buy back that protection and roll it out on certain stocks and sectors as they break resistance, trendlines, moving averages, etc...
So what does it all come down to? It comes down to using fundamental and technical analysis to guide my decision making. I review this quite regularly, although a little less regularly right now as "less is more".
The one wild card? Earnings. The Fed told us growth will moderate. Will it happen this earnings period? No one knows. And that is the hard part. Do we put on collars now? Do we leave our at or in the money covered calls in place because earnings are going suffer and thus stock prices will suffer? I am not sure, thus I am playing things pretty close to the vest and not over protecting. My defensive size is appropriate for these markets and I am not trying to force the hand of a non-volatile (see VIX) market.
Bringing that over to the forex markets, if the VIX is down, that means volatility across the board is down (see yesterday's range in the forex markets). Today, we have a bit of an outside range day in GBP/USD and I am looking for a Buffalo Bounce if equities start to drop a little bit more. But as I said, equities are "bid" and that means when equities become oversold, the USD becomes overbought and as the USD weakens, a bid appears in the GBP, EUR, etc... I am seeing this on my charts as we speak. The markets rally from down 50 to positive and the USD weakens a bit. It isn't weakening significantly yet, so you still have to understand the niche market of the EUR versus the GBP, etc... Remember, the EUR is very, very different than the GBP given everything going on in Europe. So the bid in the equity markets today as we come off our lows affects the USD in the same general way, but with little nuances here and there depending on the cross currency. Hence, technical analysis. Is the GBP weaker than the EUR today when referring to the dollar? Yes, that seems to be the case. Maybe the EUR is finding some support in the 1.2650 area and if equities rally off some good earnings reports over the next few weeks and European news stays quiet, we get a bit of a rally in the "oversold" EUR.
Lots to focus on. Keep your trading size appropriate for your account and let the markets come to you and give you an entry that has the appropriate risk for your trading timeframe.
Happy Trading and Be Environmentally Cool
Coach Brian
Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.