I sold MTCH because the spread is too wide (same issue as YY). I have 100% cash in my trading account, and won’t be trading these tickers in the future.
The most logical thing to do here is to short the market, but I know that I’m usually way too early, so I’ll hold off for now.
Current trade ideas/plan:
- I’m thinking of shorting QQQ instead of SPY because they are highly correlated and QQQ moves more.
- I will likely go short on a gap down, with a stop loss above the previous day’s high.
- Since this is a counter trend trade, the best way to play it would be to use a half position and plan to get out in 1-5 trading days. If one red day isn’t followed by any selling pressure the next day, get out for a small gain or loss and wait for the next opportunity.
- Last possibility is shorting the indexes if we gap up large again tomorrow since risk to reward would be favorable if we are targeting the ~400 ish gap fill area (for SPY).
It’s still preferred to go long with the market (since we are in an uptrend), but current levels are not suitable for my pullback strategy. A pullback to the 400 level (for SPY) would be the earliest entry level.
Bigfry's Blog 