SDS Trade Exit

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The S&P rose all day after the first couple minutes. On this cash chart this created a nice looking hammer candlestick. From a pure charting perspective, I really like this for a bullish set-up and long trade. The intraday low went below the Feb low possibly running some stops there. That may bring a reprieve to the selling at least short-term.

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This chart is of SPY which is the ETF that tracks the SPX. Notice the different candlestick pattern because the cash index SPX is calculated differently because not all stocks in the S&P open for trading at the same time. Some are delayed 10-15 min, so the cash index will not always look like the ETF.

SPY made a belt hold or meeting line candlestick today which is a bullish candlestick, but not one of the stronger reversals. However, since the market did not accelerate down after the big gap down and it closed above the Feb low and Friday's low, I don't want to remain in SDS for the short term.

I think the best opportunity will come with a move up into next week that fills the gap down around 112.00 as a place to short/inverse. The problem with going long here is I think the stop has to go below today's low for a swing trade. That's about $4 risk. But the flash crash closing low and that first unfilled gap are only about $4 above today's close. So the risk to reward is not that good.

I am tempted to get long here, but will just exit the SDS and see if there is a rebound and how strong it is. Then we can either short at higher levels or look to go long after a pullback to a higher low.

Place a limit order of 35.53 for tomorrow to exit the open short-term SDS trade.