SPY Short day-trade setting

Some back-tests related to day-trades using the negative divergences on the 20DMF have shown that when SPY is close or over its DR3 level, long day-trades should be avoided.

DR3 is 135.91 on SPY. Hence, only short day-trades can be executed... if we see a negative divergence forming.
To enter a short on SPY - or a long SPXU - the best is to wait for a bounce back to 135.91 (1360.15 on the S&P500) on a weak MF.



Pascal



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A bounce to resistance on weaker MF is a sign of weakness. A short at the resistance level is a good probability trade.

The short trade should be exited if we break above 1356 on a stronger MF.

If we continue to 1358 on weak MF, then a break above 1358 must be exited anyway. The last line is indeed 1358.


Pascal

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