New Trade - SPY

Got into a new trade today, here's the chart:

Sorry, but this chart is super busy. This is for the SPY - which is the ETF for the S&P 500. So it IS the market essentially.

Overall, before putting on this trade, I have been looking for bearish plays because my portfolio is too bullish in my opinion. I like to have about an even split between bearish and bullish plays if possible. This market seems to be getting a little heavy and even with good earnings today, we aren't jumping higher.

So, for those reasons I wanted something bearish to help neutralize my portfolio.

I noticed on the SPY Chart a couple of items that makes me believe that a bearish play might be wise:

1. We aren't going higher on good earnings from companies

2. The daily volume is average, so no big buyers are piling in to drive up the price

3. We are getting a divergence between the Stochastic indicator and price.

Let me address #3 a bit more. Look back on the candles from 9/10 - 9/22 and you'll see the up-slanting blue line. This is showing where price was going. Now, during that same time period look down at the Stochastic to find it's slanted blue line - it was GOING DOWN not up!! So we had a divergence. Notice what happened right after that divergence? The price of the SPY went down to hit the 50 day moving average before coming back up.

If you look at our most recent price action of the candles vs. the Stochastics you'll see almost the exact same set up . I believe that we're going to pull back to the vicinity of that 50 day moving average again. I'm still overall BULLISH in the market, but the market has to breath in and out. We're due for a little exhale before we can move higher in my opinion.

So, I did a real simple trade. I bought a January 115 put which is an in the money option for $7.92. Yes, a bit pricey compared to what I normally do. But, this purchase helps to even out my portfolio (thereby giving me some protection to the downside) and I can sell an option against it to help offset the cost if the SPY does not make a decently quick move down.

I'm going to slow things down at this point until I take some trades off the table. I feel very good about the balance of the portfolio and amount of trades.

So, from here, we just manage the positions.