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| Figure 1. SPY -- six month daily chart |
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| Figure 2. SPY -- ten day hourly chart |
The daily chart on the SPY remains in a uptrend, but very volatile (see figure 1). A pull back to the 124 level would not be a bad thing. If the SPY pulls back and then shows some strength it may set up some low risk swing trades. The short term time frame on the SPY is still up (see figure 2). I think on the shorter term time frame, the SPY needs to get above the 127.5 level in order to have a chance of pushing higher. Despite the powerful move in October, it has still been a challenging volatile environment. Today was an example of that, as the market sold of quite hard. I had taken some long side swing trades that I got stopped out of today for some small losses. However due to the volatile nature of this market, the next day could be a great up day and many swing trades could work. Seems that to be successful in this market you need to have an exceptional amount of emotional endurance. This is not the nice QE induced trending markets of '09 and '10. I expect more volatility as it seems traders switch between the 'risk on' trades (equities) and the 'risk off' (US treasuries and the US dollar) depending on the headlines of the day. I plan on being very selective in my trades and trading much smaller share size than I normally would if I felt we were in a low risk swing trading environment.
