One type of price action that puts me on alert for a hard down move in the market is unusually large gyrations in quick succession. That is what is what we saw during the first few hours of trading today. Points 1&2 on the chart show up and down moves larger than the ATR of the SPY. This type of signalling usually occurs on the daily time frame. For a good higher time frame example check the SPY chart from January 2010.
Point 3. The SPY was at 167.80 and sellers started to take control as the pattern of higher lows was broken. At this time SPY 167 Puts were being purchased.
Point 4. More traders on the desk jumped into the SPY short.
Point 5. The short trade is working
Point Read more [...]
One type of price action that puts me on alert for a hard down move in the market is unusually large gyrations in quick succession. That is what is what we saw during the first few hours of trading today. Points 1&2 on the chart show up and down moves larger than the ATR of the SPY. This type of signalling usually occurs on the daily time frame. For a good higher time frame example check the SPY chart from January 2010.
Point 3. The SPY was at 167.80 and sellers started to take control as the pattern of higher lows was broken. At this time SPY 167 Puts were being purchased.
Point 4. More traders on the desk jumped into the SPY short.
Point 5. The short trade is working
Point Read more [...]