SPY Short Sale Setup

In premarket comments we discuss all different time frames, the bigger picture and underlying trends, down to the short-term and very short-term opportunities. These were some comments from Monday:

“All thru the 1970s, all the inflation, soaring bond yields, conflict, currency problems, NY city’s near bankruptcy, etc. – did the stock market keep “angling up“?

 

Was that accumulation overall? Was there reaccum? Was there the retest of the breakout? Is there anything there that you shouldn’t be able to recognize? Was it wise to get off track by paying attention to all of the “news” (noise) then?”

 

That was the big picture perspective, and this was my view of a potential short sale opportunity on the much shorter term picture:

In the meantime, the volume on Friday’s rally really light, and SPY getting back into potential upthrust area. Maybe a rally, backup, and shoot for 268 magnet.”

As you can see, I gave my view of the trade opportunity, upthrust, plus from the included chart, I drew in and wrote in the specific number to go off of, 268. The high for the day was 268.02. Can’t get much closer than that.

So the original premarket chart:

 

As you can see below, I had the whole day mapped out. Yes we got the rally, and the initial backup, someone who read those comments could have tried to do a buy setup, knowing that the 268 MAGNET point was still out there as a point to sell into. Again, the high was 268.02. So we also got the upthrust.

It was the 268 which I used to go off of to look to short the SPY. The push over 268 was not yet a setup for me, I generally do not short new highs for the day, but like to short the “back-side”. Also, when I am trading the options which expire in the current week, I like to be “short premium”. And I thought this trade could be an overnight hold. So I shorted the 268 calls expiring on Friday:

 

There were 2 tiny “exorption” areas that I was trying to short calls into – the back-side – but could not get filled. The SPY then traded back to a weak support area, and started the next redistribution area. I used that area to get short. Then I did my first cover of the short calls and moved the stop down:

 

 

And held the rest overnight, looking to cover today, stop at scratch on the rest.

 

 

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About traderscott 1067 Articles
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day. Scott returned to markets over fifteen years ago where he continues as an independent trader.

2 Comments

  1. Morning Scott, curious if there was a Conference Call this last weekend? I don’t see a location on the site to look them and I find them VERY helpful and want to make sure I don’t miss them. Thanks.

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