Friday, July 31, 2015

Trade Idea: SPY Short (SPXU Long)

I've kind of been leaning toward the SPY today as one of my favorite positions so I don't have any out there. I like the way the ES charts look:
 5 min ES which is the prerequisite for any trade (my own rule) which has developed nicely this week.

 ES 10 min with a nice leading negative divergence. Honestly I'm thinking bigger picture here so if we were to get a more defined head fake move like the yellow box/green arrow, I really don't think that it's going to change the 3C chart for the better, actually for the worse so I'm prepared to sit and wait that out, I'd be looking at establishing put positions in to any such move, but if I'm wrong and this "too obvious" looking price pattern just fails early next week, I want to have the exposure, otherwise, I can survive a head fake move so I'll likely leave just a little room to act as a wider stop buffer and/or an add to buffer.

 ES 30 min with a negative divergence that is just as bad as the previous one.

And the 60 min negatives as each bounce is sold in to as seen in breadth charts declining to worse and worse readings.

 The SPY 10 min chart I was looking to today to make some moves certainly moved. I've looked at charts like this a hundred times and said, "THIS IS THE KIND OF DIVERGENCE I DON'T IGNORE", why start now?

As for SPXU
 The 1 min intraday chart is flying which is typically a good timing signal.

Contrasting it's inverse, 10 min UPRO (3x long SPY), there's a lot of damage on that chart.

And SPXU leading positive.

I just can't ignore these divergences, head fake or not, it's just worth it to me.

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