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spy

 

 

 

 

 

 

 

This was an interesting trade.

I started off being short at the 50 day with the big reversal candlestick the day before the collapse to the 100 day line. I was holding a small $SPXU position (leveraged bear ETF)  to play the short side and was in a great position and profitable on the day of the big plunge under the 100 day line, but it reversed and closed above.I held my short position, unimpressed with it getting almost back to even.

The next day, the $SPY gapped up at the 50 day line and then ran over the 10 day after some resistance. Then the 5 day ema. I had no choice but to close my short and go long with the power of that reversal. I was fortunate that I played the short side much smaller than the long side, and had such a great entry with my short. So many missed this trade, because instead of trading price, they were worried about the fiscal cliff deal not passing, or a market crash.

I took a long play at the end of day in the $SPY at $169.17 on October 10th. I then added to that position on October 14th at $170.94, doubling it. Initially, the 10 day sma was my end of day stop, then I tightened it to the 5 day ema, and to the low of the gap up day at $173.86. After the gap held, I tightened my stop to the 5 day ema, and was finally stopped out at the end of day today at around $175.79. The problem with this trade is I did not go big enough, fast enough. Because it moved so fast, I did not add soon enough before the risk reward got skewed, and I was already looking for an exit with only 50% of the size I wanted.

I also bought $UPRO in my more aggressive trading account. As you can see in the chart below, this trade that was up 15% over the life of the trade, and I ended up selling it for a 12.7% gain after the end of day drop and the bid/ask spread.

The power of my profitability lies in reacting to what is happening, and not trying to predict or cling to unfounded opinions. The market is a counterintuitive beast; always tricking the majority because they are swinging at the last pitch, instead of the pitch currently going over the plate. Fear and expectations are already priced in. Our job is to identify and go with the trend in our time frame.

 

UPRO