Tuesday, July 12, 2016

More Bearish Studies Triggering Today

I will relink to a post made in April which had the same set-up as occurring today.  An additional set up is also occurring which triggered in April.
Also I added the condition of the day's high exceeding the bollinger band, and the results had an even greater bearish skew.

Also we saw the study which triggered yesterday regarding the VIX and SPY both being up with a low VIX/VXV.  Today the VIX was up slightly even though SPY was up more than 0.7%.  That combination had a negative skew looking forward as well over quite a number of instances.

So my take here based on the objective past history of SPY is that after this little break to new highs on the SP500, there is a strong chance of at least a sell off back into the previous range before the rally continues.

At this time I don't have much perspective on whether the recent break to new highs is necessarily a bullish signal.  Given that other indexes (QQQ, IWM, NYSE) are still below their highs, I think that calls into question the long term strength.

But from a trading standpoint, all we really need is to have solid info that gives an edge and then manage the trade and the risk amounts well to profit all along the way in little bits and pieces.

Let me know if there are questions on specifics of the trade here for your situation.


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