Hello, Jeff: I appreciate your questions. By way of getting to answers, let me first show you my updated chart:
share.esignal.com
Basically, I have a few more minor harmonic numbers, plus the pitchfork lower tine, gap support and 20 day ema support AND a trendline off the October 10th lows, all coming into play in that 885-890 zone. So...
why did you close out the last third of your puts even though you had already nailed down very nice profits on the other two thirds and felt that there was a good chance of anohter 10 points left on downside?
First, they are not puts, but futures contracts that trade virtually 24/7. Prior to closing them I had dropped my stop to 901. The risk of being stopped out overnight at 901 is quite high, due to low liquidity and high volatility in the night session. Better to take them off and possibly re-establish the position in the morning, hopefully at a higher price.
Second, I will sleep better going flat overnight. I'm basically a day-trader, and prefer to be flat at the end of the day, unless I see a clear reason to hold longer.
also, what would it take to break the move to new highs that you are looking for? Would a break of 888 in am and close around that area be enough to open up the possiblily of lower prices?
I am absolutely open to lower prices here. But I see a risk of a run to new highs, otherwise I would be heavily short now. I prefer to see what happens at this next support test. If it breaks, I see at least another 50 SPX points that I can try to catch. So if I miss a few in order to lower my risk being caught in another reversal up, that seems like a good tradeoff.
I will probably be short again in the morning, looking for that last 10 points. But some sideways action will likely follow that before any further significant decline, so we will have time to look things over.
Hope that helps.
Good Trading,
Phoenix |
