It is nice to be correct. The market was poised to a bearish trend and it sure did. In just two sessions we saw big sell offs. I was thinking what would push the market that down? Was it FED? I doubt this would be the only reason.
There are a few items I could find on the internet:
- China manufacturing index PMI dropped below 50 which is a sign of a contraction of their economy.
- As we saw yesterday, FED downgraded the US economy and predicts a big slump which will take several years.
- The “Twist” plan enacted by FED is a BS. Period.
However, from the technical point of view the market was poised to go down anyway. So more profits on downside. And I decided to preserve some of them by selling SPY early morning and now converting my CRM puts into a spread. I sold October $120 strike puts and collected $849 credit (preserving my gains made by holding naked puts). That limits my risk to literally zero and provides a reward of making another $1600 per spread. What a great risk/reward ratio!
Happy Trading!
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