A Fat-Pitch Trade in the S&P 500
This morning following the April U.S. employment report we entered a long SPY trade which was shared in real time in the Trading Lab over at CEO.CA. This was a trade we had been stalking for a couple of days and the weaker than expected employment report offered the catalyst to trigger the trade.
The setup was based upon an area of confluence near ~$204 on the SPY which included:
- The first touch of the rising 50-day moving average since the rally began in February
- The lower 2-standard deviation Bollinger Band
- Support from early April
- Test of 38.2% Fibonacci fan
The fact that the pullback from the April high has occurred on relatively low volume and lower range days added to the attractiveness of this setup.
As it turned out after chopping around in the $204s for the first few hours of trading the bulls gained the upper hand and equities turned green with the SPY forming a bullish engulfing candlestick. We entered our long position in pre-market trading and we are following this trade with a trailing stop.
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