Wrong But Still Profitable

So the triangle did fail yesterday. The first tell was when it failed to get above the intraday 38% retracement. I hedged with SPY 124 puts just before that level and it turned out to be the top of the day. It also made my day a lot easier too. No, I didn't hold them all the way down. But I held them long enough for the profits to give me a cushion as the triangle broke. That is why hedging is a great tactic to add to your trader's toolbox.

By then, I was holding only a small SSO position. I can't believe I did this, but I held the SSO because the market started to feel like a wash 'n' rinse, a term I first heard from Joe DiNapoli who first taught me Fibonacci theory.

I tweeted that I was interested in the 1205-1200 area. The S&P only got to 1209.43, a large 38% retracement level on the daily chart. I added to the SSO there and bought RSU as well. I just took off the SSO in the pre-market this morning with a nice profit. I'm holding the RSU to get short against if we can get to the 1238-1240 level.

I'm glad that the S&P finally tipped its hand. There was no stress yesterday. I had no need to be right, only to know what the market's intentions were. I feel relieved now.

At this point the S&P is projected to eventually head much lower. That's good for me and my inventory. If it should get above 1244.34, I would get concerned that it had a few more tricks up its sleeve.