The folly of seeing the forest while missing the trees was the lesson I learned today. We had a good odds long-trade setup today. It was harder to anticipate because the market has tried its best to shake out new bulls for three days in a row.
On the 60-minute chart, one can see volume peaking about three days ago in the SPY $107.50 area, but the continuous gap downs and failed bounces were certainly not confidence inspiring. Plus all the “Hindenburg Omen” articles and the bearish analysis in the media nearly threw this trader off the scent!
The key for me is to focus on the best setup at the moment and leave the macro trend to the pundits (good point from Jeff @ Market Rewind and Bill @ Vix and More in today’s chat). Kudos to Market Rewind for sticking with longs and the “Big Move” alert on last night’s ETF Rewind Pro. There were plenty of chances to catch today’s big move while the SPY tested the 50-ma at the open before it took off.
Given the precarious technical position on the major indices, I don’t feel like chasing this move. We probably have a bit more upside of 1-2% in the next couple of days, but I would rather short it like half a million other traders out there, and as usual the timing will be tricky since so many are looking for this trade on top of the upcoming options expiration this Friday. My “hope” would be to ride that short for another dip and re-rally next week against a stronger bottom.
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