Tuesday, August 13, 2013

SPY swing trade parameters

Good morning traders. Approximately 70% of individual stocks trade in the same direction as the broad market which is good enough reason to discuss it here. However, today's analysis of the S&P 500 Index (SPY) could also be viewed as its own swing trade setup. Please observe the chart below.

The bears have had two solid opportunities to push the market lower since mid-July, but failed to do so. Most recently, no "real" sellers showed up either Monday or Tuesday of this week when prices were at daily lows. As a result, anyone who did position short on either day ended up trapped (last two green price bars). This is the market clearly saying it wants higher. The parameters for a long broad market swing trade entry via SPY are noted on the chart above.