It’s been a long wait for my system to trigger a buy signal on the S&P500 (ETF:SPY). Only had one this year and it was short lived. Well, I have another on 12/22 close of business. The expert commentary is Buy if SPY exceeds 125.39, which is the day’s high.
I am not one to predict too much long term. All I tell myself to do is follow the signals from the systems that I have created. Still, I smell a little long movement in the air and during the last week after the first huge 300 points DJ30 up day, I put in an order to close my PBR put positions at a profit and also TLT at a profit. I was long on TLT which rises when the markets falls. I was also holding put positions on PBR which made me money as PBR fell. But that could be changing, and it is time to reel in the profit it generated, before it turns into a loss! I think we will see some upside here
Why? Well, when I look at the chart on SPY, it is nudging the top of a resistance trend line. And my ICE and other short term indicators are point up. See chart below. It has been a long grind sideways this year within the narrowing triangle shown by the two trend lines in blue. If SPY breaks out of the trend line, there is likely to be a short term push for further movement in the same direction as traders would see their stops hit. Along those lines, I also sold of part of my SPY put options that provides protection against my long position in my 401K. Maybe this is the Santa rally we were hoping for, but volume is pretty muted. Still, if it breakout, volume can come back quickly as well as a surge, and I don’t want my contrary positions turning into a loss and holding back a rise in my portfolio holdings.
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