I am Short the SPY
- Posted by Greg Harmon
- on July 25th, 2013
I have been a vocal bull for sometime now so this may shock you. I bought some S&P500 SPDR, $SPY, Puts yesterday. Well technically I bought Put Spreads, as I am not expecting a crash, but the chances for a pullback seem reasonable right now. The daily chart of the SPY below shows why. The SPY had been tracing out a bearish Shark pattern since making a low at 155.73. Those that follow Harmonics know that a Shark can have two points where it reverses, an 88.6% retracement of the initial leg lower or a 113% retracement of it. This initial leg is from the 169.07 high to 160.25 low, and gave targets of 168.06 and 170.22. The first target was met last week and the chance for a reversal from a high at 169.86
has been building the last few days. Starting with the Evening Star Monday, confirmed lower Tuesday and a longer red candle Wednesday, was enough for me to pull the trigger. The Harmonic has not triggered yet but it is looking more likely. And when it does the first target is a 38.2% retracement of the full pattern or the 155.73 to 169.86 range. I have added the Fibonacci’s to the chart so you can see the target at 164.46. The Second target on a continuation lower is at 161.13, the 61.8% retracement. This trade was a August 9 weekly 168/164 Put Spread for $1.00, risking $1 to make $4 if the market continues lower. A 4:1 reward to risk ratio that will play out over the next 2 and a half weeks.
Join the Dragonfly Capital Views Premium Membership
Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through July 2013 Expiry and sign up here.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Premium Earnings 12-7-16: Costco and lululemonathletica
- The ABC (D)’s of the Russell 2000
- The Coming New All-Time High in the Nasdaq 100 ETF
- Premium Earnings 12-5-16: Autozone
- 5 Trade Ideas in BlackRock: Bonus Idea
- 5 Trade Ideas for Monday: CME, Costco, Jack in the Box, Louisana-Pacific and United Technologies
- Top Trade Ideas for the Week of December 5, 2016: The Rest Premium
- Top Trade Ideas for the Week of December 5, 2016: The Best
- SPY Trends and Influencers December 3, 2016
- Macro Week in Review/Preview December 2, 2016
Dragonfly Capital Updates