What a wild week for the indexes last week. On Monday SPY rested slightly under the 50 day, then Tuesday $SPY collapsed from the 50 day and found support at the 100 day. Wednesday SPY went over the edge as the fear of a stalemate in Washington D.C. reached its zenith, but the SPY was able to stage a comeback and finish above the 100 day creating a reversal candle that I was not at the time impressed with. Then suddenly the clouds parted the angels sang and the bulls stampeded back into stocks Thursday morning causing a gap up to the 50 day then a surge over the 10 day and the second best day of the year for returns in the stock market. Friday followed up with another up surge getting the SPY a little extended and due for some consolidation to let the 10 day catch up.
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The past two trading days has seen amazing strength and momentum forcing me to take long positions.
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The market appears to pricing in a deal being struck in Washington D.C.
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If the market can rally like this during the debt ceiling and Obamacare funding debate what will it do with any good news?
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The odds of politicians taking the U.S. over the fiscal cliff is very miniscule.
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SPY is a little over extended and would benefit from some price consolidation here to let the 10 day catch up.
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High probability of SPY returning to all time highs this month.
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Plenty of room to run with the RSI at 57.37, this whole year 70 has been the accurate signal of overbought for SPY.
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The 50 day and 10 day were both broken triggering my buy signals.
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Thursday’s SPY volume on the gap and go was twice what it was on many of the down days for those wanting to see volume.
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IWM with in striking distance of all time highs, QQQ close to 13 year highs.
I was short into the plunge Tuesday but was stopped out of my short on Thursday and I went long. I am currently holding a smaller than usual position in $SPY for my trend trading account and a position in $UPRO in my more aggressive trading account. My stop is a same day end of day close below the 10 day sma.
