Final Update: 12/9/2016
Earlier today I have decided to enter Calls at 209.68 when the market was coming down pretty hard. With the gap being filled at this level along with the 50% Fib. Retracement level here, I thought this was a good level to go long for my time frame. Keep in mind that I do not day trade, and I didn’t get into this position just for a quick few days turn around move, but I am looking for that new all-time-high move that might be coming towards end of the year. As of today, we do not have any kind of evidence of a strong bounce, but I do think it might be coming soon even if the price slides down some more. More updates later.
Personally, I think it didn’t matter who was going to be elected yesterday, the price was set up for higher; so I tune out noise and I only let the charts tell me where the stocks might be going. As I explained on my previous update, that 209-vicinity was a good level for me to buy the dip and hold (not to mention 200SMA was residing in that vicinity-Brexit bounce also happened around 200SMA as you can see in the chart above. Today, SPY is trading at 216ish and looks very strong after clearing well-above the “Bull Flag” channel-resistance. After three straight days of up-move, I think minor-term pullback might be coming either tomorrow or Friday. I forecast bullish action remainder of the year (of course with its ups and downs in the minor term), and my ultimate target is 227-230ish.
We did see a minor term pullback on SPY last three trading days at around 217 as it was the prior resistance level (see red horizontal line). Well, with today’s move, we are now clearing well-above that prior resistance level today. If we do see a pullback down to 217ish in the next few days, I do think that old resistance level may act as new support. I think 220 is in the cards on SPY, and I am still calmly holding full position since 209.68.
SPY continues to blow right through the resistance levels as you can see in the chart above; 214ish was the falling resistance (blue dotted), and then it was 217ish horizontal resistance (red), and today right on that 219.50ish of ATH resistance. Very bullish sentiment as of today with overbought nature in the minor term, but this does not mean it can’t continue to grind higher. In fact, I do think it will continue to grind higher (with minor-term ups and downs) without seeing any sharp pullback possibly until end of this year. However, in the event that I am wrong in this assessment and the market do see a sharp pullback, I think as long as it stays above 215-217, the uptrend should resume back up. Additionally, if it does pullback to 215-217, I think that’s a great level to buy that dip (I might even add more at that level), but I wouldn’t want to chase it up here unless you are day trading it. I am still holding full call-position since 209.68.
SPY continues to move higher crushing the bears trying to call ‘tops’ last few weeks. My daily-oscillators are in overbought territory on SPY along with major indices such as DIA, IWM, IYT and the financial sector XLF; and IWM & XLF in extreme overbought territory. This does not mean the market must roll over or big crash is coming, it means we may see some volatility kicking in here (with small ups and downs) and we may continue to grind like this for much longer than most can expect; this is how this market will exasperate the short sellers and the put holders while the trend is strong to the upside.
Earlier today, I’ve decided to close 1/2 of my call-positions here at 220.60 on SPY (holding the remaining). Earlier this week, I’ve also been closing out DIA XLF calls which I got in around similar time as when I bought the dip on SPY @ 209.68 on November 1st while closing out many of our long/call positions as I think odds are catching up against the bulls, but again, by no means, I don’t see any evidence that this thing is going to roll over. I will be holding remaining 1/2 and see where it goes in the next few weeks, if we do see a sharp decline in the market, I wil be buying that dip.
Happy Thanksgiving and thanks for following my journal entries.
- “Old Resistance” is now becoming a “New Support”
- Gap is still open
- We bounced off of the 10-Day EMA (not shown in the chart)
Market sentiment remains bullish as of today, anyone trying to call top here is the same people who have been trying to call top since this thing started to rally in early November. I think as long as the gap remains open, minor-term sentiment will remain bullish with current resistance of 221.65. I am still holding 1/2 of my remaining calls here.
What a day! Great day to be holding calls today as SPY moved 15 points since my entry back in 209.68 prior to the election. Looking at the chart above, after finding “New Support” at 209ish, this thing just took off today. I am targeting 227ish, and when/if we get to that vicinity, I will close out my calls completely; however if we do see a sizable gap up tomorrow morning, I may close out my calls at that point. I am still holding 1/2 of my calls since 209.68 (closed 1/2 at 220.68, see 11-23-2016 Update above).
During the mid-day earlier today, I’ve decided to close another 1/2 of the remaining call-positions at 225.50. Here is why, I thought the move earlier today was too stretched concerning the fact that we’ve moved very fast since 208 and after slight pullback since 220ish, I guess I was looking for slower move like sideways-to-upwards movement like the move we’ve seen in July of this year. I think we could continue to grind higher, however, odds are stacking up against the bulls as the move is getting stretched. And this does not mean “crash” is coming or big corrections. I think maybe 3-5% correction might be coming but I am not sure ‘when‘ as of today. I do think SPY could grind higher, but I might close everything out tomorrow before the weekend, I am very satisfied this move with gain I had so far. Still holding 25% of remaining positions as of today.
My Final Thoughts
My trade has come to an end today as I completely closed out my remaining Calls today @ 226.47 (about 40 mins before the market close). I think this trade has been one of the most satisfying / feel-good trade for me this year (not because of the gain, because I did have much higher percentage gain on my BSX trade). Because, at first, I felt like I was going against the whole world when I bought that dip on November 1st and felt like everyone was against me as it seemed like the whole country was looking for the crash–see this article, “Big Top In The Market” that was published on Forbes on the day I engaged long on SPY (11/1).
Well, just few trading days later after my engagement, market gapped up significantly (11/7) and it closed the day very strong, and this time I knew the move that I was anticipating has started. Next day, the move continued on as the market soared again. On the election night (11/8), futures tanked as low as -5% when the Trump’s win was obvious (this was when twitters were going wild calling for the end of civilizations–sounds like a typical bear always overreacting), first I thought, it could be a problem for my longs (not just on SPY, but I was holding many long positions on other stocks). I calmly re-evaluated that if SPY opens at 205ish next day, that might still be ok. Well, futures rebounded hard into the late night while Icahn was buying that dip furiously. I went to bed when futures recovered 50% of its loss thinking, “it’s good, this will do.” Next day, market gapped down slightly and it felt as though nothing had happened on that futures. Since then market kept on going higher with micro-term pulbacks along the way, when this was happening, I felt as though I was the only one caught this rocket-ship while everyone left behind. It was great feeling, not that I didn’t want anyone else to make money, but I knew that my analysis was solid and proven right.
Many “experts” and so-called prominent media sources called for (since early this year really) “market crash worse than 2008 was coming!” or “Sell everything!” But I believed in my analysis which I came to a conclusion that we had high probability of seeing massive short squeeze while the whole country was going for the “Big Short” on this one. And that’s probably why market continues to thrive even today, while the sentiment is at its record/extreme ‘overbought‘ condition. Again, market always fools the majority.
Traders who knows what they are doing, they don’t need additional resources from so-called “experts.” I believe many great traders are not on Twitter or on YouTube (And these people knew this move and they profited from it immensely), because the more people know about their strategy/plan, the less likely it is going to work out. Yet, if you do a YouTube search “2016 Market Crash”, you will find so many videos from so-called “experts,” and if you dig little more, it’s no surprising that these “experts” been calling it every year since 2011. I, myself also been thinking about retiring from online presence, and trade in secrecy, maybe when I get married and have family..
Interestingly enough, when I published video, “5 Reasons Stock Market NOT To Crash,” many were opposing my analysis, and their argument was exactly same as what these “gurus” were saying (almost word by word, and it sounded like they were brainwashed to believe it so blindly) and the “gurus” were the Gold Pumpers who think stock market is going to “zero” therefore buy their gold. What I am saying is, those people did NOT do their own research but blindly believed what these “gurus” were saying. Again, if you dig little more (on these stock-to-zero-gold-to-infinity “gurus”), you will find that they’ve been saying the same thing since 2011.
Most people don’t do enough research, they just believe anyone as long as they “seem” legit with high views or high followings or because it has been published by Forbes, MarketWatch and etc-remember these sources make money by you watching their show or reading their articles, so, of course they will trying to get your attention with provocative titles. I tell you right now, just because they are prominent or has high followings does not make them legit or knows what’s going on, especially in the world of trading. I am actually sick of these people always misleading and imputing fear into the masses and common traders/investors like ourselves (I’ve done a video exposing Marc Faber who has been coming on CNBC and calling for “Market Crash” since 2011).
Anyhow, as of today, I don’t know when I will get back into SPY, but I definitely wouldn’t short here. I am very bullish in the overall market for 2017, and even possibly next 5-years. Thanks for following and reading my posts.