Wednesday, February 19, 2014


I love it when a plan comes together.  Even more so when that plan involves making a little scratch.  Two (put) trades I want to highlight today, SPY and SLW.  I placed these trades near the close on Tuesday and I'll highlight why and where I think they might be going.  Below is a SPY a daily chart since the beginning of the year.  This is really was a no-brainer risk reward trade.  We have a ton of volume representing overhead resistance highlighted in red and decreasing daily volume on this move up.  In order to break that overhead resistance the market would have to either gap over and above the resistance zone or bust through on very high volume to absorb all that supply.   Instead the market moved higher today on lower volume only to fall apart for the rest of the day.  The next stop on the SPY is 180.69.

The SLW wasn't as obvious but still the risk reward again is very attractive since it was hovering around resistance after a large gap up on Monday.   Below is the daily candlestick chart with the $25.87 support and resistance area taken off a PnF chart.  You can see that the gap up candle rallied right into resistance closing well off the highs.  The next day another attempt to break resistance failed on lower volume.  Again the risk reward is apparent with a stop loss on a close above resistance.  Again today there was another attempt to rally above resistance (I was a bit nervous but patient) only to see it fail and follow the rest of the market down.  The next support is at 24.18 which would make this another great return on my put options.

That's it for today.  Lets see what the market has in store tomorrow.

Thanks for reading.

No comments:

Post a Comment