REPEAT (from yesterday):
I'm looking for the S&P to get into the 1238-1240 area, possibly lower, but not below 1226.64. I'm looking for a reversal there and a rally to 1300 where it will end. At that point the market would be vulnerable to a massive sell off.
This morning, given the events in Europe, the futures should've been down hard. There was a bad bond auction in Spain, Italian spreads continue to widen, the ECB is showing signs of panic, and Fitch warned of US bank contagion if the EU gets into further trouble. Futures did hit an overnight low of 1220.25 which would equate to my S&P cash stop getting hit, but they've since bounced hard.
I am playing this lean and mean, aggressively scaling in and out and trying to keep my basis low. I buy more than I want to hold then scale it out into bounces. If I'm eventually correct in my assessment, I will add to my longs on pullbacks as the market heads higher, something I want to get better at.
If I'm wrong, and the S&P gets below 1226.64, I'll lose very little (it will still hurt -- every loss hurts no matter how small) but in percentage terms it will be tiny. Therefore I will live to fight another day.
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