On the afternoon of Tuesday, July 7th, the SPY had shaved two points from its value, and the SPX was going to close beneath the 200 day simple moving average. The bears were out in droves, marauding and eating pic-a-nic baskets stolen from frightened bulls.
In the comments section of Fly’s blog I remarked that it was time to go long, and that I would do so, on the next open, at 25% of account value. Some traders agreed with my assessment; others asked if I was serious. Unfortunately, there was a select group who felt the need to berate my call.
No big deal, really, to be challenged on a market call. It happens a good bit around here. Often, I welcome a good challenge, as having to stand for my convictions makes me a better trader and system developer. So, In order to respond to the negativity and excessive bearishness in an appropriate manner, I did some testing and wrote this post: No Wonder 95% of All Traders Blow Up.
The post was meant to be provocative, and it certainly achieved my objective. However, what good is an unpopular entry, if I do not get to follow the trade through to the profitable exit?
Of course I did not know for sure whether this trade would be a winner or not, but I knew the odds were on my side. To be honest, there were several times when I was fairly certain the trade would be closed for a loss. But that is the thing about trading with the odds. If nothing else, trading with the odds gives me the conviction and staying power to see the trade through to the planned exit.
My SPY position will be sold this morning.
Should the SPY close higher today (Tuesday), it may be worthwhile to review Rob Hanna’s system for shorting when the index has closed up 2 days in choppy conditions. That’s right, I’m insinuating that it is getting to be the time to build short positions, just when many are getting excited about getting long.