Why I shorted SPY at $110.87

1. We began the day with some negative sentiment as SPY moved down to $10.14 within the first 30 minutes of trading. This initial down trend supported the idea that SPY was on its way to $109.52 to fill yesterday's Gap.

2. After the consumer confidence numbers were released, SPY showed brief strength but came back down soon after. This indicated that there were still plenty of sellers out there.

3. The fact that there were still sellers out there supports the idea that the Consumer Confidence numbers are bogus. Why are they bogus? One thing to note is what consumers are confident about. Instead of people believing conditions will get worse, consumers responded that conditions will remain the same. The confidence index takes conditions holding the same as a positive reading. That is misleading. Watch for a more negative report when the income data for October is reported on Wednesday, Nov. 25. 

4. With this weakness or negativity, SPY still managed to climb up to  $110.96. This indicated a potential Top as it meets a downtrend that began at yesterday's highs. The 100 Day Moving average offered additional resistance as it intersected the down trend line at $110.88.  See chart below:

SPY 5 Minute Chart

When I saw there was some resistance at this down trend line, I shorted at $110.87. The time was 10:56am. I will be looking to cover this position around $109.52.