Weekly Recap: If you look at the hourly SPY chart you may get the impression that SPY shuffled sideways this week, but the the truth is that SPY continued its way downward this week. At the beginning of the week it looked like the move downwards is slowing down and at the middle of the week it even looked like SPY found support near the middle of the Bollinger band and is about to bounce, but then on Friday it just gapped down below it and despite valiant rebound efforts closed below it.
On the weekly chart it looks like the triple negative divergence I have been following is finally taking its toll and we are headed down. The possible resistance points I see are the middle of the Bollinger Band at 165.33 and of course the trend line at 161.76
On a shorter time frame the positive divergence keeps on piling despite the lower lows SPY made this week, so unless SPY breaks down (which it looks to do according to the futures, at this time) , we are looking at one hell of a bounce. On the other hand the positive divergence also means that if SPY does break down it has room to decline before becoming extremely oversold and making a new positive divergence.
From the trade system point of view we had two trades this week both short and both due to a reversal pattern. The first made a small profit of 0.14 points but the second is still open and looks like will make a big profit.
Battle Plan for the 9/30/2013
Stop for the 60 min reversal short is at over and should be treated as a take profit stop (see below explanation)
Signals for Long are:
60 min long over 169.88
120 min long over 170.48
* Stop loss lines should be triggered if there is an interval close above them (i.e. 60 min or 120 min ), they are published in the daily blog and updated during trading hours on twitter.
* Take profit lines should be triggered immediately when crossed, they are usually issued during the trading day on twitter.
* Entry signals should be triggered when crossed, but take into account that until there is a confirmation (i.e. close of the interval across the entry signal) , the signal can become a reversal signal.
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