SPY Thoughts January 27

**These are my thoughts on the SPY ETF in my Daily Trade Ideas which includes many, many more charts and setups**

You miss 100% of the shots you don’t take. –Wayne Gretzky

What a bloodbath Friday was.

Markets fell heavy and hard.

I tried some shorts and some longs with mixed results but losses were very small and the gains outweighed them, but not by a lot.

I had a nice short early in the day and should have held it since we closed on the lows much lower than I’d expected.

Seeing the S&P off more than 30 handles is very rare but we did today and on very heavy volume.

After a year or so straight up, we are now ready for a nice correction that could last a couple months before we begin to turn higher once again.

Let’s check the charts and begin with the break of the megaphone pattern I’ve been showing and talking about for a week or more now.

SPY January 27, 2014

Often when markets gap down 2 days in a row it’s a buy signal.  That was not the case today.

To be honest I didn’t short at the break of the 50 day average which was the short level.

I was too scared.

With markets already off heavy Thursday I just didn’t have it in me to really get short with any conviction considering how strong we’ve been in the last year.

Basically I overthought it and while I didn’t pay the price, I did miss out on some sweet profits opportunities.

Scared money almost always loses and I was scared.  I just didn’t see this drop coming so fiercely so quickly.

I was looking for a week or so of consolidation before we broke this bearish megaphone pattern but it rarely works out exactly how you plan.

We are definitely due for a bounce now and I have a few trades on from late in the day Friday that should take advantage of that if it comes.

I’d like to see the SPY move back up near $181 before I will consider shorting it.

Have a great weekend and use strength to exit positions if you still have any.

Warren

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