10/6 – 3:30 p.m. New York time
I exited SPY for a profit below my target, ending the third leg of the series. I have not yet made a decision on rolling it forward. I have updated the analysis with details.
10/6 – 11:15 a.m. New York time
I have exited my directional play on SPY, the third position in a series, for a debit of $0.41 on each options contract, with shares at $254.00.
SPY peaked at $254.75 in the first 10 minutes after the closing bell, and this morning prior to the open began a sharp, small-scale decline that reversed at $254.04, but stopping short of the prior peak.
The peak, if it holds as the reversal point, is the end point of a 5th wave rise that began last month.
The pattern is typical of a decline, in this case most likely waves 1, 2 and the beginning of 3 within a much larger downtrend.
In looking at the chart earlier this morning I noted the reversal at $254.04 and set a nonce rule that if the price declined below that level, I would exit. It did, and so I did.
Here’s a chart to help clarify the pattern, with 10-minute candlestick bars. The lighter background is trading outside of the normal session.
At this point the SPY series is still alive, and so I won’t calculate results yet. If it turns out that my analysis in exiting was wrong, then I shall re-enter. If I was correct, then I shall end the series and consider a bear play to capture the downtrend.
10/5 – 8:50 p.m. New York time
I have no prospective trades on my desk for Friday.
By Tim Bovee, Portland, Oregon, October 5-6, 2017
Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.
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Based on a work at www.timbovee.com.