FullyInformed.com

Market Timing / Market Direction Spy Put Trade Back On

Feb 15, 2012 | SPY ETF Hedge Strategy (SPY), Stock Market Outlook

Just yesterday I closed my SPY PUT trade selling my last 10 spy put contracts for the same price I bought them at. I explained in an article what I saw within my market timing indicators that told me not to worry about hedging my portfolio. Sometimes though you have to realize you might be wrong.

As today’s trading wore on my market timing indicators kept flashing that the market direction was indeed going to change and that my original outlook was probably right. The market direction is stalling.

It looks like the market is going to retest 1300 on the S&P. This could be an important test to determine if there is enough support to push the S&P 500 higher.

Here Is What Concerned Me

Below is the trading day today. There was a slight rise in the S&P 500 by noon and then a gradual selling. I saw the oversold indicator in the ultimate oscillator which started around 12:30 PM, but the bounce was poor and there was no overbought indication throughout the day. I bought 10 spy put contracts around 2:40 PM. If there was an interest in buying stocks by large investors there should have been a strong rebound and an overbought indication from the ultimate oscillator market timing indicator. There wasn’t.

Market Timing / Market Direction chart for S&P 500 for Feb 15 2012

Market Timing / Market Direction chart for S&P 500 for Feb 15 2012

I felt that the 10 spy put contracts I bought basically replaced the 10 that I had closed yesterday. I figure I can hold until the loss is around $700.00 on my spy put contracts.

There are other indicators as well. The US Dollar is starting to rise again. The Euro is falling. This goes directly back to the problem within the European Union and Greece.

VIX Chart Flashing Warnings

There is also this VIX chart from Feb 9 to Feb 15. The VIX chart indicates that volatility is not subsiding. On Friday volatility reached 21.98. The supposed good news on the weekend helped push volatility lower but two days later it is back climbing and today twice the VIX pulled back only to see volatility continue to climb even higher. This quick rebound in the VIX did not occur last week.

Market Timing / Market Direction VIX CHART

The VIX Chart for Feb 9 to Feb 12 Shows The Inability of Volatility to Subside

 

Market Timing / Market Direction Indicators

Here are my market timing indicators for Feb 15 2012 and their prediction of market direction.

The market timing indicator, momentum is positive although the reading of 101.45 is lower than yesterday, but it is still higher than Feb 1 and Feb 2. If it turns negative than I believe the market will definitely test the S&P 500 1300 level. A positive test of 1300 will prove beneficial to the market moving higher.

MACD (Moving Average Convergence / Divergence) is now negative. Weakness will definitely enter the market tomorrow or the next day. As long as the market holds 1300 the bull is still around.

The ultimate oscillator, my favorite market timing indicator is now down to 60.76. This is a big drop from yesterday’s 72.59 and last week’s readings of over 80. The overbought condition in the S&P 500 is over. The question now will be whether the pullback is small or large from here. Today’s drop from 72.59 to 60.76 is large enough to indicate that the next move down could be larger than expected.

Two days ago the rate of change was 3.00. With the selling in the last half hour of today’s trading the rate of change has fallen to 1.33. It is still positive but also pointing to a move for the market lower.

Both the slow and fast stochastic market timing indicators are lower from their recent extreme readings above 95. However they will have to move lower still before the market can bounce back up. This also would indicate that there will be more selling ahead.

Market Timing / Market Direction Indicators For Feb 15 2012

 

Market Timing / Market Direction SPY PUT Trade Summary

I calculate that to hedge my portfolio I can hold for about a $700 loss which is roughly what I made earlier this week with the original spy put trade.

There is enough uncertainty in the market to warrant my putting back in place my SPY PUT Hedge for the moment. The market timing indicators are warning me that my original prediction might in fact have been correct. One of the most telling signs of a possible short-term top remains the amount of overall bullishness. The February effect is well-known. It has been the worst month of the spring period for 16 of the last 20 years. In the last 5 years the expiration week of February has been down. While certainly not a market timing indicator, these statistics cannot be ignored. It will be interesting to see what the rest of this week brings to the stock market.

Select This Link To View Today’s SPY PUT Trade

Search

Select to view all results...

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors

Recent Outlooks

Morning Investing Strategy Notes for Mon Jun 24 2024

For FullyInformed Members the morning Investing Strategy Notes for Mon Jun 24 2024 discuss the outlook for the final week of June. There are trades planned in TQQQ ETF, SPY ETF, IWM ETF, Carnival Corp Stock (CCL) and more. The …

Stock Market Outlook for Mon Jun 24 2024 – Potential Bounce But Lower

Prior Trading Day Summary: Friday was triple witching with options expiring and volumes spiking higher on both New York and the NASDAQ. The S&P saw 7.2 billion shares traded while the NASDAQ had 9.2 billion shares change hands. Both indexes …

SPY ETF Hedge Trades And Intraday Market Updates For Fri Jun 21 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Jun 21 2024 following a lower close on Thursday. The support and resistance levels for today are updated. I take profits as they appear, as markets are volatile and …

Morning Investing Strategy Notes for Fri Jun 21 2024

For FullyInformed Members the morning Investing Strategy Notes for Fri Jun 21 2024 discuss the outlook following a slightly lower day on Thursday. There are trades planned in TQQQ ETF, SPY ETF, IWM ETF and more. The morning Investing Strategy …

Stock Market Outlook for Fri Jun 21 2024 – Weakness – Choppy Bias Lower

Prior Trading Day Summary: On Thursday the S&P shot above 5500 for the first time which brought in sellers. With volume rising in the afternoon the index slipped to close at 5473 down 14 points. 57% of all volume was …

SPY ETF Hedge Trades And Intraday Market Updates For Thu Jun 20 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Jun 20 2024 following a flat close on Tuesday. The support and resistance levels for today are updated. I take profits as they appear, as markets are volatile and …

Morning Investing Strategy Notes for Thu Jun 20 2024

For FullyInformed Members the morning Investing Strategy Notes for Thu Jun 20 2024 discuss the outlook with technical indicators signaling overbought. There are trades planned in Microsoft Stock (MSFT), TQQQ ProShares UltraPro 3X Bull NASDAQ 100 (TQQQ) and CarMax Stock …

Stock Market Outlook for Thu Jun 20 2024 – Choppy – Dip Possible But Still Up

Prior Trading Day Summary: On Tuesday (June 18) investors got the latest retail sales numbers which were slightly weaker than expected. coming in at 0.1% which was lower than estimates of 0.2% but better then the previous reading of minus …

Morning Investing Strategy Notes for Tue Jun 18 2024

For FullyInformed Members the morning Investing Strategy Notes for Tue Jun 18 2024 discuss the expectations for retail sales on Tuesday. There are trades planned in KB Home Stock (KBH), Kroger Stock (KR), Darden Restaurants Stock (DRI), Winnebago Industries Stock …

Stock Market Outlook for Tue Jun 18 2024 – Overbought – Dips Likely But Higher Close

Prior Trading Day Summary: On Monday the SPX opened lower on light selling but within an hour the buyers had returned. By the end of the day the S&P was at a new all-time high in a convincing rally of …

SPY ETF Hedge Trades And Intraday Market Updates For Mon Jun 17 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Mon Jun 17 2024 following a flat close on Friday. The support and resistance levels for today are unchanged. I take profits as they appear, as markets are volatile …

Morning Investing Strategy Notes for Mon Jun 17 2024

For FullyInformed Members the morning Investing Strategy Notes for Mon Jun 17 2024 discuss the outlook for the next two days leading to the holiday on Wednesday. There are trades planned in IWM ETF, Adobe Stock (ADBE), Tesla Stock (TSLA), …

Stock Market Outlook for Mon Jun 17 2024 – Weakness – Lower Day But Still Bullish

Prior Trading Day Summary: On Friday the SPX had a flat day, losing just 2 points to close at 5431. However 75% of all volume was being traded lower and 66% of all stocks on the index were falling. The …

SPY ETF Hedge Trades And Intraday Market Updates For Fri Jun 14 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Fri Jun 14 2024 following another new 52 week high close on Thursday. The support and resistance levels for today are updated. I take profits as they appear, as …