Close longs and sell short, sell short stop SPY at 132.83.
That means only sell short if the price on SPY drops below 132.83 which is the low from Friday. I will not sell short of course at this stage or otherwise. But there are times I will hold on to puts and make money on the downside. I find the signal quite unusual after the strength SPY has been showing lately. But that is the nature of some of these trading systems that look at much more than moving averages before pronouncing judgement.
The market is now approaching its 2011 highs and we will see if it strides through it or pauses. I may still go ahead and tighten my puts so that if it does drop, it will give me a better chance at retaining my profits. The negative of course is if the market rips up, I will be giving away some of my future gains, as I am still biased long, but sitting with puts protections on my longs.
I realize this commentary is a little advanced for the newbies; but that is part of learning also.
Newbies might want to think of this action as a "buy stop" but in the other direction.
ReplyDelete