SPY Seems Overstretched…

I would like to think that SPY is kind of overstretched at this juncture. Nevertheless, it may not have reached the ‘irrational exuberance’ stage.

My ‘technical’ reasons for an overstretched SPY:

  • Exceeded the upper bound of Keltner Channel (2.25)
  • MACD – reached the highest peak
  • RSI – overbought

News like this don’t pain a bright future for the US market.

https://www.marketwatch.com/story/salesforces-nearly-30-stock-rally-this-week-is-a-possible-nightmare-scenario-for-the-dow-committee-11598473166?mod=home-page

SPY_27082020

I would love to believe that there will be an immediate pullback in the next 1-2 weeks, towards the 320-330 mark before rising further. To capitalise on my hypothesis, I bought a credit call spread on SPY as follows:

  • Short 369, long 371
  • OTM: 83%
  • DTE : 50 days (16 October 2020)

Disclaimer: This post is not an endorsement or investment advice. Please refer to the general disclaimer of this blog.

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