US equities markets have closed down the last 7 days which is the longest losing streak in 5 years. This ( 7 days or more) happened 3 times in last 20 years : In 2008 when Lehman failed, in August 2011 when US debt was downgraded and in November 2011 for the EU debt crisis. This time and since last week, the markets have started to anticipate other potential nasty events for the markets which are 1/ a Trump election at the White House (Risk of short term selloff ) 2/ Risk of constitutional disputes in case of Clinton election (The risk for the markets would be more mid term but positive just after the election).
Technically, US markets (Here shown NDX100) are reaching oversold levels matching with strong bounces in the past .. in case of « normal » corrections as shown by red ellipses. During the last two 20%+ corrections oversold levels did not matter and markets corrected further .
Potential stopping points (Blue ellipse) are are at 4702 (2015 closing and current quote on NDX futures), 4694 (July 2015 top) & 4656 (Sept.2016 low).
Trump elected at the White House bears the risk of MUCH more downside, one must be clear but it should not be the preferred scenario here as Clinton is still leading in majority of polls.
ACTION : Sell 1/2 of Nasdaq Put at current price of 2,28EUR ( Nov 3rd 10:55) . We keep limit placed yesterday at 2,70EUR for the other half . Note that given the increased volatility in markets ahead of US election i might quickly reestablish the full hedge.