I Bought A Put, But It Was Reluctantly...
SPY Came back up to the point that has served as resistance for the past 19 trading days, and my trading strategy dictates that I should enter short here and play for the reversal, with a tight stop loss just above the trend line resistance. I followed my plan, but if I'm being honest, it was hard to do so. This looked and felt like a breakout day, and the RSI did break out of its resistance line. I halfway expect to see a gap up big green candle tomorrow, but I am sticking with my plan. Everything I know about trading tells me this is an obvious bear flag consolidation pattern, and that we should break out below and continue down. Problem is, most times when EVERYbody is totally bearish on the market and seeing the same pattern over and over, that's when traders get lulled to sleep and awoken by a massive move in the opposite direction. So, while I did buy a put today due to my trading strategy, there is just no way I would "advise" anyone to follow that lead. Instead I would advise a "wait and see" strategy and react to price action accordingly. Break out above, likely long at least until old support line around 300-301 area for next test. If rejected again, short again. Just feels too redundant and obvious to be right. If you bought a call option or went long today, I would not have a bad word to say about it, put it that way. Happy hunting and GLTA!!
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