It's time to place SPY/SPX longs here, you don't really need a stop loss if it's part of your investment portfolio. You could establish a hedge by buying IBB puts at $255, Dec 16 expiration, but it might not be needed after the smoke clears out. Risk is basically a new daily low, but you could go with a wider stop as well, or none at all and simply size it as a % of your account that fits your risk profile. If going with an investment type position, you would use part of your cash, for a non-leveraged SPY long position, I'd reccomend 10% at least, and you could buy puts at the money in SPY, or IBB, which you can sell for a minor loss once we're confident the bottom's in. Or, you can spend half the cash on SDS longs as well, which would hedge the position with half the cash use.
The level we tested here, the speed line support, the VIX retracement BIG$ support, and the sheer panic makes this a possible candidate for a long term bottom in SPX, so don't miss the opportunity. Or, you can believe the boys screaming wolf again...
Good luck,
Ivan Labrie.
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Up for the day, closing above 2100 will be extremely promising here.
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Despite some drawdown on the entry, we're well in the money and with good odds of seeing a strong advance here.
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Waiting for election results. A Trump victory could be better for the market in the long run. We'll wait to confirm a new buy entry, the investment opportunity will be very good. For now we wait. The level we hit is already interesting, but we need to wait for some specific signals tomorrow, or in the next few days.
Thanks for your chart. Your suggested long term SPY position. What is your time frame for long term if I am to buy call options on spy? Thanks IvanLabrie.
IvanLabrie
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Hi, you're welcome. I'm long with 20% of my cash.
You can buy out of the money calls, or short cash secured puts for 1 year without much problem.
The best option is owning SPY in my opinion, you get the dividends, and can treat it as part of your portfolio, and rebalance it periodically, or improve cost basis if viable, etc.
I'd rather sell options, to hedge during pullbacks, than buy options.
IvanLabrie
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The target is 249 for SPY by the way, based on the 2 month timeframe signal from my other publications.
ropaar
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Awesome reply, thanks. Seriously I think your points make a lot of sense.
IvanLabrie
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Glad to be of help.
There're a few prime picks as well, like ABMD, TWTR, quite a few I posted recently, you can check those out.
There's been a pattern for a long time, and that is that shorting hasn't been a very profitable, or easy line of business in equities, but trading with covered calls has been great, so I'd favor that when applicable.
Cheers!
ropaar
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Will definitely check that. One last question for now if I may. You track GDX and GLD?
IvanLabrie
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Yes, I do, I mostly trade in the daily and weekly timeframe, for a couple days, to a couple weeks if viable (rarely viable lately).
My instinct would say that we'll see a decline in gold and silver, since they rallied as a risk off play, but I don't feel 100% comfortable with shorting them (unless you're not long SPY or only trade commodities, otherwise, it's redundant as a risk on play).