I am going to use this morning’s dive in the stock market to take profits on my position in the S&P 500 SPDR’s (SPY) May, 2016 $212-$217 in-the-money vertical bear put.

This gives us a welcome 8.9% profit during a period when most traders have had their heads handed to them.

Some of you have already emailed me on why I came out of this particular put spread among the four I had.

A 40% net short in a single asset class is a rare event for me. So I vowed to cut it back on the next down day for risk control purposes only.

The S&P 500 SPDR’s May, 2016 $212-$217 in-the-money vertical bear put spread had the most profit to take, given that it was the furthest out-of-the-money with the shortest expiration date.

If I blow up my performance betting the ranch on a single asset class, I am too old to get my old job back at Morgan Stanley.

Besides, they probably wouldn’t have me anyway.

I never believed the frantic 220 points rally in the Dow Average for two seconds. No volume, no news, and no cross asset class confirmations meant it was not to be believed.

It was just another opportunity for the high frequency traders to pick the pockets of hedge funds by squeezing them out of their shorts, which they have been doing on a weekly basis all year.

That conviction allowed me to hang on to my aggressive 40% net short position.
 
Better yet, WE ARE POISED TO MAKE AS MUCH AS ANOTHER 10% PROFIT BY THE END OF NEXT WEEK WITH OUR REMAINING POSITIONS

To remind you of why we are short the S&P 500 in a major way, let me refresh your memories.

It’s all about the strong dollar. A robust buck diminishes the foreign earnings of the big American multinationals, major components of the S&P 500.

I think it is much more likely that stocks grind down in coming weeks to first retest the unchanged on 2016 level at $2,043, and then the 200-day moving average at $2,012.

Share prices are anything but inspirational here.