Over the last thirty years I’ve developed a fascination with the financial markets. I have traded equities, options and futures and have developed a process to selecting and trading various instruments. Occasionally I’m asked my opinions about the stock market in general or about individual instruments in particular. Over the next few weeks I will discuss my philosophies and methods that I use to evaluate a particular opportunity.
****Please note that these discussions are purely for fun and any reader should consult professionals for specific advice. Nothing contained herein should be considered a recommendation.****
Today I was asked a question about the short-term prospect of the SPY ETF. Today’s close of 128.84 is the highest close this year and near a point of resistance of 129.45 set October 27, 2011. Is this a good time to buy?
First, time frame is important to consider. In this case the trader likes to keep positions for two weeks to a month.
Markets move up and down periodically peaking. Based on a holding period of thirty days or so the market is at or near a peak. From here the market might decline with a trough occuring around January 23rd. Potential points of support are 126.10, 125.05 and 120.85.
I would wait to see if a trough does occur about January 20th before I would consider buy the SPY.
In a future post I will discuss my rationale.