SPY TRIPLE TOP - I just bought some puts.

Discussion in 'Trading' started by jackstone54, Apr 7, 2008.

  1. Look at the chart. Spy bottomed twice and it appears there is resistance going through 138. If it cant make it through 138, then its going to turn around hard on us. I bought some puts just now.

    This isnt really a triple top, but its similiar in the fact that the index cant make it through on the third time during consolidation.

    This might be a Feb 2007 all over again. Remember what is approaching and that is May where there is classic weakness. If we cant rally from here, then the Spy will skid down to 115 in a heartbeat...
  2. ssblack


    Aren't triple tops pretty rare???
  3. A triple top usually occurs near a market top. Your chart shows SPY at the bottom of its recent range.

    Kind of risky buying options of of chart patterns you do not understand really well. A triple top is more like what happened in SEP - NOV of 2007 on SPY.
  4. I think the trade has some merit here. I'd just bail and take the loss once the market proves you wrong, probably once it manages to break through the 141/142 area.
  5. The trade has some merit but I think it's a bit premature. Looking at a 6month chart, if you draw channel lines for the last 6 months you see a definite down trending channel and it's at the top of the channel now and could head down. How far down? If you draw another channel from about Mar 7th until now you see a shorter term up trending channel. Which is currently about the middle of this channel I could see a pullback to about 134-135ish. The big move will happen near April 17th when it will be forced to choose WHICH channel to follow...the longer term downward or the shorter term upward.

    Right now I think a Straddle might be a better move or just wait until it decides which channel to follow.

    I don't have Photoshop where I am right now or I'd post my chart.
  6. you could call it a range play too but i guess TA terms sound cooler.
  7. I don't care how cool it sounds, if it works and makes me money. :D
  8. Check out the inverse.
  9. My experience with price is that when it gets in these consolidation channels then it either breaks much higher or much lower.

    The only thing that seems certain is when price hits the top of the channel and doesnt make it through then it goes down. When it hits the bottom of the channel and doesnt make it through then it goes back up.

    I dont see it going through 138. I make my stop at 139.

    I also check the other variations of the etf for confirmation such as inverse spy SH and equal weight spy RSP.
  10. Here is what the trade should look like if successful...

    Compare this qqqq chart from Feb 2007 along with today's spy chart.
    • qqqq.jpg
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    #10     Apr 7, 2008