Tuesday, August 9, 2011

Trade Update: SPX

Wow look at that cascade from the 200 day moving average. Back when the SPX broached its 200 day moving average I talked about a significant the event was, but I had no idea it would be this bad this fast. I also mentioned that if 1275 was broken with any force look out below. That was only a week ago. Yesterday I posted that I would short the SPX on a break below 1170. No sooner had I looked up then we were below 1170.

We shorted the SPX with a quarter position at 1160.46 and with another quarter position at 1151.73. The SPX closed at 1119.46 yesterday giving us a gain of $1025 in the first position and a profit of $806.75 in the second position. That's a gain of $1831.75 so far we only have half the position. I hope this route continues so that we can not only protect what we have but fill out our position.

So, first things first. And the first thing is to protect what we have. We don't have to get very fancy, let's just put two dollars stop on SPX. So, move all stops to 1121.46.

With the stop set the only thing we worry about now is a gap at the open. You will have to watch at the opening. If there is a gap you will have to remove your stop manually and then buy to cover. Don't just panic and by, wait to see if the gap fills. You should be able to get a read. If you see the gap filling wait until it does before you cover.

Sell 1/4 SPX @ 1151.73
Buy 1/4 SPX @ 1121.46

Sell 1/4 SPX @ 1160.46
Buy 1/4 SPX @ 1121.46

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