SPX is basically doing what I thought. The 1470 level was a major area for my Fibonacci retracement. We tagged that area and pulled back slightly. The interesting thing is this sideways action, this could be signaling a couple things. The first would be a bull flag, but we will have to wait to get a confirmation. Confirmation would be a new high followed by a continuation of the trend. Or this sideways action is a distribution stage signaling a possible correction in the near future. Either way I am still not adding as many trades as I usually do.
The market does seem very resilient and with yesterdays pullback being bought up almost confirms to me we might not see any type of correction until 2013. It makes me a bit more bullish over the next few months, but my feeling is to see how October goes. If October goes well I will have to assume the holiday rally is underway. In anticipation of a rally I am going to set some trades that will have plenty of downside room, but are neural to bullish trades.
One new trade that I will share with you is on GLD. I know the recent bullishness on gold and I have to say it was not easy taking this trade, but if you remember a month or so back (CLICK HERE) I started getting bullish on gold and I have been trading it from the long side. A few days ago I put a new trade on GLD.
My weekly SPX butterfly will be going on today. I have had great success trading this strategy over the last two months. This is my idea of what I will put on today, but the actual strikes might be different.
Another trade idea I have for a neutral to bullish market is an IWM broken wing butterfly. I really like broken wing butterflies for one simple reason, they are very easy to adjust and manage.