With a hanging man pattern on the daily SPY chart, the week started off with a bearish tone. As discussed in prior posts, we like to wait for confirmation when entering and exiting a trade. Our entry “confirmation” long is simply a break ABOVE the prior day’s candle (setup candle), and vice versa for shorts (break BELOW prior day’s bearish candle).
In the case of a gap up (as was Monday’s price action), we wait for a break ABOVE the first 15-min candle to get long and vice versa for shorts. Therefore we didn’t have many long’s trigger from this week’s watchlist, but our shorts are performing nicely. This is the reason a balanced portfolio of calls and puts is so vital, you never know what the market will throw at you.
HEAT – Long
IOC – No Entry. Never broke prior day’s high of 1/8.
EXPD – No Entry. Broke 1/8 low, but it was during the first 15-min which no trades are placed according to our rules.
ERTS – No Entry. Gap lower, unable to get in.
Overall, + $ on the week. When in need of a quick hedge, as discussed before, grab calls or puts on the QQQQ, SPY, IWM, or DIA. The tight spreads allow for a quick hedge at an efficient price to be established.