Market gapped up 3% today. I was glad I didn’t have much SPXU left to cause me grief. Since I emptied out my SDS positions in my IRA account last Friday, I initiated 500 shares of SDS today. That was a no brainer. But beyond that, I was simply frozen and had absolutely no idea what to do with my trading account.
Would I chase long after a 3% gap? Heck no, especially given the EU financial crisis. Add to shorts? That’s a bit more of a possibility but the market had not reached any major moving averages today. I felt the market could rally higher. And frankly, any positive rumor from the policy makers regarding reflating the Euro could easily rocket the market higher especially given the oversold conditions. I simply stayed on the sideline and didn’t make a single trade. It was the right thing for me to do. The market was boring in the morning and meandered without trend in the afternoon. No good signal to speak of.
In a bigger picture, last Moday’s gap stopped the rally and the 23.6 Fib level provided the support. I think more consolidation is in order and I plan to add some short on the 50 day EMA and the 50 Fib retracement areas. That would be the area around SPY 122 plus/minus .25.
Portfolio Value: $132,100