Could have been a Great Intraday Play on SPY

Last Tuesday night (SG 11pm), I mentioned to my handholding class, a possible set-up to play the Intraday trade on SPY. Unfortunately, at that time, we are all about to call it a day (leave for home). So we just watch the market for a while and did not put in any live trades.

However, I have documented how I would have played if I am at home, trading comfortably from my study room.

The SPY (S&P500 ETF) was trading in a range after the market open on 2 Feb 2010. Traders are waiting for the Pending Home Sales figures at 10am EST. It turned out that the figures are better than expected. As I mentioned in my previous posting, the major indices are expected to have a short rally of at least a 50% Fibonacci level. This news just give SPY a perfect excuse to go up.

At the handholding session, after the slight false break (after 10am EST), I mentioned to the class that I would have long the market at 109.00 level for an intraday play. My stop loss would have been 108.85 (very small). My first target would have been 109.80 (one of the resistance level). I would have played either a Feb or Mar 109 Call, or played ES (e-mini futures).

They are many levels where one could take profit. One way to take profit is when SPY closed below the EMA 13 (at 109.97). That is US$97 for every 100 shares of SPY or about US$48 for every 1 contract of options or about US$450 for every contract of ES e-mini futures. It would also mean that you have to stay up until 2.10am SG time or 1:105pm EST.

Cheers !

PersianCat (Millionaire-in-progress)