For SPY, we need to look for a confirmation candle before we can short the SPY. The target is way below the Feb 2010 Low.
Cheers !
PersianCat (Millionaire-in-progress)
Friday, February 19, 2010
61.8% Fibonacci Retracement Fulfilled
The recent rally since the hammer on 5 Feb 2010 had fulfilled a 61.8% Fibonacci retracement (more than the requred 50% retracement) for the Dow and Nasdaq Composite Index. For S&P500 index, the retracement is almost 61.8%. The major index is now free to continue with its downtrend (assumption is that the Jan 2010 high is the start of the big correction).
For SPY, we need to look for a confirmation candle before we can short the SPY. The target is way below the Feb 2010 Low.
For SPY, we need to look for a confirmation candle before we can short the SPY. The target is way below the Feb 2010 Low.
Saturday, February 06, 2010
A Great Hammer is Formed
[Opps ! Made a typo error - Supposed to be a Hammer (not a Hanging Man)]
It has been 2 horrifying days (Thursday & Friday) for some and profitable for others. For some others, it is best to stay in the sideline.
As for me, I was caught in the wrong footing on Thursday. My trading psychology was not even average. I've got burnt somewhat. But I make it up with a strong showing yesterday - playing ES (S&P500 e-mini futures). I played the market until 2pm EST. Thereafter, I was too exhausted and shutdown my PC. I do not want to return my profits to the market.
Looking at the SPY chart today, the market actually took 4.5 hrs for SPY to drop about $2 but took the next 2 hrs to rise up and ends positive. It thus created a Hammer in the daily chart.
What does it mean then? To me, it might give me the opportunity to long the market (at least on the Intraday basis, once the SPY breaks Friday's high. I will try to keep the Stop Loss small - have to look at the Intraday chart on that day.
Based on the current behaviour of the market, general market can still drop further. However, for the market to be healthy, the current drop needs a short rest and create a short rally of least 50% Fibonacci retracement. The question is, where will the short rally starts. (I am looking at a basic ABC wave.)
The Hammer with an extremely long shadow but small body looks like a very good reversal candle. It looks like a good place to start the short rally. If indeed, it is, then the rally will reach at least at 109.85 before continuing with its downtrend.
It has been 2 horrifying days (Thursday & Friday) for some and profitable for others. For some others, it is best to stay in the sideline.
As for me, I was caught in the wrong footing on Thursday. My trading psychology was not even average. I've got burnt somewhat. But I make it up with a strong showing yesterday - playing ES (S&P500 e-mini futures). I played the market until 2pm EST. Thereafter, I was too exhausted and shutdown my PC. I do not want to return my profits to the market.
Looking at the SPY chart today, the market actually took 4.5 hrs for SPY to drop about $2 but took the next 2 hrs to rise up and ends positive. It thus created a Hammer in the daily chart.
What does it mean then? To me, it might give me the opportunity to long the market (at least on the Intraday basis, once the SPY breaks Friday's high. I will try to keep the Stop Loss small - have to look at the Intraday chart on that day.
Based on the current behaviour of the market, general market can still drop further. However, for the market to be healthy, the current drop needs a short rest and create a short rally of least 50% Fibonacci retracement. The question is, where will the short rally starts. (I am looking at a basic ABC wave.)
The Hammer with an extremely long shadow but small body looks like a very good reversal candle. It looks like a good place to start the short rally. If indeed, it is, then the rally will reach at least at 109.85 before continuing with its downtrend.
If the market breaks the last Friday's Low and stay below, the market is then signalling that the current downtrend from Jan 2010 High is still on track.
Cheers !
PersianCat (Millionaire-in-progress)
Wednesday, February 03, 2010
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.
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)
Next Target for SPY
When we forecast the (possible) directions of a stock, index, etc, we do it based on certain assumptions. When that assumptions are proven wrong, we have to be flexible enough to change our views of the market.
Last Tuesday (about 8pm SG time) handholding session, I updated the group that, provided that the 29 Jan 2010 Low is not broken, I am expecting the major indices to experience a very short rally of at least a 50% Fibonacci retracement from the Jan 2010 Low to Jan 2010 High. Thereafter, provided that the Jan 2010 High is not broken, the market will then continue with its down trend breaking the Jan 2010 Low. If the current short rally broke the Jan 2010 High, then the assumption that the market is heading downward do not hold water anymore.
For SPY (S&P500 ETF), one can then expect it to move up to at least the 50% Fibonacci retracement (around 114.14) before contunuing with its downtrend breaking the Jan 2010 Low.
What does it mean then to me? I would short the market again when the market is closer to the Jan 2010 High.
Cheers !
PersianCat (Millionaire-in-progress)
