Is this a no-brainer or deceptively obvious?
Factors pro shorting:
- Open gap up
- Week volume on the ascent
- Strong Rising Wedge pattern (bearish)
Stochastics and MACD are also drooping slightly.
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I sold SPY calls yesterday and I’m now short (: ) via Dec 2014 puts.
This is based on the overbought levels and a few other indicators, like a very high number of stocks above their 50MA and a very low VIX.
It’s not a fundamental case and I’ve got no opinion as to what the economy is or isn’t doing. I just think at this point it’s a higher probability trade than being long.
I may have been too hasty selling AMD, as the volume and pattern confirm an imminent breakout, despite a short-term overbought condition.
Might have to chase it…