I will come out and say it. Today was by far my best day of trading this year. My patience of waiting for the big break a couple of weeks back is now paying off. I covered my entire SPY short today at an average price in the high 75s. I also covered a little DIA, a little XLI and some QQQQs. After all of the covering, I should have a slightly bullish – market neutral tilt for tomorrow.
My current plan is to continue playing this as a new trading range between 750-805. We did close a little below 750 today so we will see if tomorrow brings us back into that 750-805 range or whether we keep heading lower. RSI has not been this low since October so that adds some support to covering some short positions today.
Saying that, do not forget about the long term double top that is in play. The long term chart gives me a lot of confidence that $SPX will at least hit 600 (and perhaps even 400).
The one worry that I did have today was that if we continued to plunge towards 600 (click on Sunday Night Coffee if you missed my next long term target on SPY) that my handy SPY chart did not have any answers below 750.
With that in mind, I have minted a new chart which perhaps can provide some guidance on the ride down to 600.
I have overlayed fibs from 1995-1998 over the long term fibs from all time $SPX chart.
I notice a couple of interesting things. First, the chart was reasonably fib friendly for the 1995-1997 period. But much more interesting was that the 161.8% and 261.8% retracements were right on the ball.
My hope is that the fib spectacles prove themselves as accurate if and when $SPX makes the move down to 600. My road map is as follows:
100% RL – 785.51
78.6% RL – 746.01
61.8% RL – 715.00
38.2% RL – 671.43
23.6% RL – 644.48
0% RL – 600.93
The one bummer to end my day is that it looks like ESI took off in after hours trade. That is all for tonight.
UPDATE: I forgot to mention that it appears FXY is finally breaking $106.
