Saturday, June 11, 2011

Oops I was wrong about the SPY bounce and am paying for it

Yup looks like I am dead wrong about a possible SPY bounce unless we see a vicious bear trap move early this week... not looking likely given the selling at the close. Friday's action was fugly as we opened gap down and immediately started selling at the open at the 5 EMA on the daily. In the process we lost 23.6% fib and headed straight for the lower BB. I guess straight orderly selling should be expected given that what we're seeing is the inverse of quantitative easing, "QC" quantitative contraction.

I've been buying or more appropriately slightly snowballing SPY and IWM for the past 3 days (still acceptable within my risk parameters) and should have heeded small cap's relative weakness as a sign of continued risk aversion. As for day trading I've been having a nice streak of positive days but pretty much gave it all back Friday by doubling down on a bounce. I broke discipline and my trading process but I'm okay with that as I knew I was gambling and not trading. 

I shut it down around 1 PM EST or 10 AM PST and decided to take my mind off my trading pain by catching a summer matinee movie. Before I left I spent an inordinate amount of time researching Super 8, Kung Fu Panda 2 and X-Men trying to figure out which one would be most interesting and appropriate for my current state of mind. I chose to see X-Men and was extremely impressed with the not so cartoonish acting (especially Michael Fassbender from Inglorious Bastards fame, the ubiquitous James McAvoy and Kevin Bacon) as they were to flush out and give depth to the unexpectedly complicated downbeat plot. Anyways I digress.

So I'm still expecting a bounce sometime in the near future (hopefully early this week into Opex) or around 1250 which is the location of the 200 SMA and the Egypt lows. Check out Josh Brown's Yahoo Breakout segment for more info on SPY 1250 @ReformedBroker



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