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There is little doubt that the markets have confirmed sustainability and this appears likely to continue barring any major surprises. Technically the markets still want to keep rising. Volume remains firm and there are few sellers so buyers left behind when the markets took off in March are having to pay steep prices to get a stake in the market in these robust times.

The SPI 200 has experienced a remarkable run up over the past few days, perhaps exceeding the expectations of even the bulls in the market. Over the past couple of weeks, I referred to the potential for an opportunity on the short side, relating to the recent Double Tops in September. I can personally testify to the good profit opportunity that presented itself with this short trade. If you were still holding that trade, the story would be very different now. Suffice to say, I have long since covered any short position.

The markets at the moment present challenges aplenty. Some have been finding it hard to get into the current move thinking it may well be coming to an end or even over. The recent retracement in late September had many thinking that a change in trend was likely to occur, only to watch the markets move strongly away again. Stepping back and looking at a larger time frame can give you some perspective. Combine this with what I call going back to basics and there may be some light at the end of the tunnel yet. The basic assumptions in the market always remain constant and I measure these through a few key factors.

A bear call spread is a credit spread created by purchasing a higher strike call and selling a lower strike call with the same expiration dates. This strategy is best implemented in a high volatility, bearish market and offers both limited profit potential and limited downside risk. Since this is a credit spread, it is best to use options with less than 30 to 45 days till expiration. A bear call spread makes the maximum profit when the short call expires worthless. Therefore, it’s best to choose a short strike price that the underlying stock has a high probability of falling below.

I am revisiting the question “is it too late to enter the market?”, as there are so many investors constantly asking this question. They look at the juicy profits achieved over the last few months and ask is there room for more. I believe the short answer is yes but that does not mean you go out and splurge tomorrow.