When Do You Step Back On The Gas? (SPY)
The last few months and weeks have been very slow, my proverbial trading gas pedal has been less than half down or even on cruise. Summer trading combined with the post 2008 crash environment has left us with little volume and high implied correlations.
During this period of time most prop traders i know, including myself have taken a backseat driver role in regards to trading. This helps preserve gains and limit losses in a slow environment but most of all this period of time helps recharge your brain and batteries.
After labor day weekend we should see some volume come back into the market as bigger traders/players step back into the markets. This is the time where you as a prop trader or even home gamer pushes the gas pedal down. We are seeing market weakness which reminds me of mid 2008 trading leading into the fall/winter 2008-2009 turmoil.
This is a signal the market may have something up its sleeve. I posted back on July 27, “Is the market in a death spiral”, it sure seems that way now that we are seeing weaker jobs numbers and
15 year lows in existing home sales. Oh an i cannot forget to mention the old Hindenburg omen, now has stuck three times, today being the third.
With the stars quickly aligning, including the H&S at 1150…1220…1130; the time to ease off the cruise and step on the gas is quickly approaching. Once the momentum is put back into the market via a volume increase we could really see great trading opportunities which have been few and far between this summer. The key is staying patient waiting for the market to give you the best opportunity for profit.