A SPY Amongst Us

At the present time, I only trade the SP500 E-mini futures contract. A good proxy for that contract is the SPY (the SP500 ETF.) I trade both long and short based on a proprietary system that I developed. I may write more about that in future posts. I also read (but don’t trade on) the tea-leaves, otherwise known as technical indicators. I watch pivot points, moving averages, Fibonacci levels and price support and resistance levels. I’ll write more about these in future posts as well.

This afternoon, as I watch the market give back some of yesterday’s gain, I am watching the 38% Fibonacci retracement level at 97.20 for the SPY. This is a 38% retracement for the up move starting at last Friday’s lows to this morning’s highs. This type of retracement is not unusual for such a large move. Short term traders are taking profit. Often times, people who missed out on a big move will see a 38% (or 40% if you want to round) and decide that it’s a good time to initiate a trade. If the market moves below that level then it’s probably more than profit taking.