Covered SPY at $110.85

The Short was a nice setup, but too much good news pushed the markets higher.
The Fed raised the 09 GDP target: from -1.5% - 1.0% to -0.4% to -0.1%. Also, the FOMC assured that the recent fall in the foreign exchange value of the dollar had been orderly and appeared to reflect an unwinding of safe-haven demand. 

I probably should have covered my short position after the down trend line was broken on SPY somewhere around the $110.70 level. However, I held on through the highs of $111.14. The reason I held onto the position was that I knew it would be tough for the market to break much higher than the morning's high of $111.05. Probably not a good way to trade given the news and the upward momentum. However, in this case it worked out to be a break even trade. Too bad, was really a great setup. I thought of holding the position over night, as I still expect yesterday's Gap Up to be filled, but I'll see how the Market opens tomorrow and take it from there.

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.

Short SPY at $110.87 Intraday Trade

I think we are at the highs of the day right now and am Shorting the SPY

Consumer Confidence Inspires Brief Buying Surge

This morning at 10:00am EST, November Consumer Confidence was reported at 49.5 vs the expectation of 47.3. The SPY jumped up from  under $110.20 to  $110.68 in about a minute. That is the first time in a while that I have seen the markets react so powerfully to a news release. Only 10 minutes later though, SPY is back down below $110.20. Even with SPY inching back upwards right now, the fact that the consumer confidence boost was short lived, should be a telling sign that SPY will move lower today. 

But in regard to the report, my question is, what are consumers confident about?