UPDATE - Close Feb Position

Nobody beats the Market 100% of the time. It is a normal part of trading to have 2 or 3 losing months each year. It happens as a result of the Market going into a Market Structure Stage 4 while a position is on. The key is to minimize the loss that occurs in those months. One of the hardest disciplines to learn in trading is to close a position at a stop loss. This discipline is essential in becoming a professional trader because it determines whether an account shows at profit at the end of the year or winds up losing all the profitable months to a few unprofitable ones. Things move faster to the downside so when key support levels are broken we quickly close the position as we did yesterday for a reasonable loss of only about 9%:

Close - 6 Mar/Feb 114 SPY Call Calendars for about $0.74

Close - 1 Feb 108 Put at about $1.80

UPDATE

Close the February 114 Call Calendar Spreads. Close the February 108 Put.

UPDATE

The SPY had a bullish close so we'll sit tight for now in anticipation of the bounce continuing.

UPDATE

The SPY continues to consolidate in a Market Structure Stage 1 channel between 109 & 110.50. We'll continue to watch for adjustment possibilities tomorrow.

UPDATE

The market is closing up today and the Advancing/Declining Issues (ADI) line is positive. So, I think we'll wait another day before adjusting our position.

UPDATE

The SPY is closing today below the 50 DMA, so Monday we'll start adjusting our Feb position.

Update

Looks like the Dec high around 111.75 & 50 DMA around 111.35 may be the next stop area for the $SPY. We'll adjust if it closes below there.

We made a new Jan closing high on the $SPY today. When we close decisively above 115.15 we will adjust our position. http://bit.ly/7GvL5s

UPDATE - The $SPY tested 115 and sold off remaining in the 115/113 Stage 3 channel. Our position is in profit and the Greeks look good.

TRADING SYSTEM SIGNAL - OPEN FEB POSITION

Our "window of opportunity" is beginning to open up and it's time to initiate our February position. It's a new year and with it comes the hope that the economic recovery will be confirmed by the guidance from the 4th quarter earnings announcements to come out over the next 2 or 3 weeks. Just in case things aren't as rosey as the Market has priced in we'll make sure our position is properly hedged to protect us from a downside earnings season surprise. Volatility has come down to more comfortable levels with the VIX closing under 18 on the 11th. But we'll stick with our Calendar and Butterfly strategies in case the apple cart gets upset.

We are in a Market Structure Stage 2 on the Daily Chart, and a Stage 3 consolidation occurring on the 30m Chart. So we'll set up for business with a Calendar Spread at the 114 strike:

Calendar Spread

Open - 6 Mar/Feb 114 SPY Call Calendars for about $0.98

Hedge the Calendars:

Open - 1 Feb 108 SPY Put at about $0.98 (1 covers 6 Calendars)

Conditions are beginning to form for the opening of our February Income Spread Position. http://ping.fm/UjLLm

Head's Up! Next week we'll start monitoring the Market for an entry signal for our February Income Spread position. http://ping.fm/wSQbj