The Peak of Perfection

Finally the SPY appears to be appreciating the low oxygen at the heights to which it has climbed, and has begun a retreat. Big or small, I can’t say, but a retreat none the less. Just what we need for some swing trades. The official strategy rules for a Long SPY trade is 2 days below RSI(2) of 30 — and then a slow 1-2-3-4% progression. Even the computer trades this setup at over a 90% win rate.

 Added to the QQQ/QLD trade on today’s Close, due to further pullback from my initial entry. But as can be seen in the chart below, QQQ appears to have bounced off the first level of Support I had suggested, 82.5. If the market stays strong, then it will re-test its previous high in the next day or so. If not, 81.5 is the next logical downside target. And since RSI(2) headed below 15 today, I initiated the first half of a December call position late in the day.

 Opened new trade in XLB Materials sector on today’s Close since it was oversold, and the worst performing sector of the 9 Spyder sectors. After the late afternoon plummet, it ended with an RSI(2) below 15, so a good entry. I did not select a leveraged version of this ETF (such as UYM) because of the “toppy” nature of the overall market. This is no time to be aggressive. But with such overall market strength, I have fond expectations for this trade.

Options traders closed EWZ put trade today for 25% profit. Anyone who held to the end of the day would have scored closer to a 40% win. But I sold early and took my profits so I could concentrate on new trades. The chart below shows the clear “short” trade setup and resolution to the downside that options traders were able to capitalize on. And note that just as the chart initially suggested, the target of 47.5 on the downside was hit today. Sorry there was not a good ETF inverse trading vehicle for this setup.

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