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Wednesday, August 25, 2010

SPY Daily Chart w/Today's Intraday Prices

- SPY in early morning is trading lower. This would be the fifth straight days of decline if we close down for the day. Stochastic Oscillator (11-day) is showing that SPY is at oversold levels, so we could see a technical bounce from around 104.2, which is today's value of the lower channel line of the current, short-term trend. The upper line's value for today is at 108.5.

-All indicators are confirming that a Trend (down) has taken form. The rule is to follow the trend, but I would be inclined to take some of the bearish position off at around 104.2 and look to add it back on at higher SPY levels. Of course SPY could keep falling, but prices do not go into freefall without a clear and present shock. Fears of a double-dip recession are real and currently has a strong hold on the markets, but this plays itself out over a longer-time period.

-Implied Volatility on SPY has risen now to 27, compared to EFV indicator's value of 24. I would tilt my bias to start shorting options, but not aggressively...yet.

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