Volatility bounced off key support last week and is poised to move higher.

Trader Art - The VIX

Insiders in Tesla Motors sold what they could to the public and collared their remaining shares. My sell signal should ring soon. It is then that I will be short.

Trader Art - TSLA

Hasbro (HAS) is a leveraged buyout (LBO) candidate, and it’s vol trades cheap. The company claims it turned down an offer to be taken private from Providence Equity Partners. My model shows the buyout price at $52 per share–about a 25% premium from here.

Trader Art - Hasbro LBO

On board The Errol Flynn I fly sky high. Too fast to live. Too young to die.

Today the S&P sold off strongly into the close. If recent lows are broken, the next support is at the February lows.

Trader Art: S&P Daily

Despite an attempt to squeeze the Euro higher at the end of last week, the price action remains decidedly bearish.

Trader Art: Euro Futures Daily

I remain short the S&P and the Euro.

Rarely is there a setup like we have now and the profit potential is immense. Volatility could settle back, but it sure doesn’t feel like it’s going to. It could move as high as it did in 2008. Or it could move higher.

Trader Art VIX Weekly

Meanwhile, back at the factory, the accounts are repositioned and the only stocks we own are gold and silver names. We also own various calls on gold and silver and a fair amount of puts on the euro.

I previously wrote of the S&P 500 holding to it’s pattern of higher lows. Stocks have recovered off their lows, but have come upon resistance, which at one time was support. Given this picture, I am looking to short the S&P rather than be long it.

Trader Art - Support Becomes Resistance Oil on Canvas

Greece

Remember this about Greece: they cannot be bailed out by borrowing more. You cannot borrow your way out of too much borrowing. It does not work. Once debt levels reach a tipping point, there is no way out except default. Which is what Greece will be forced to do through a forced restructuring.

Big Trade

Given the crosscurrents, we are looking at a trade that could be bigger than the crash of 2008.

Hold on. The big trades are always full of twists and turns.

Stock indexes sold off violently last week. The bottom print was 1065.79 on the S&P 500. In my opinion, it will be difficult for the market to breach that low for the next 2 to 3 months.

The pattern of higher lows continues.

Trade Art: Higher Lows