Technical Analysis & Fundamental Analysis

S&P500 rejected at 2000 historical high and SPY rejected at 200. Technically it looks like SPY is going through a correction with short term price target at 190 (Up Trend Channel Support and also the Resistance turned Support level).

Fundamentally S&P500 is over value base on PE ratio. See PE Ration Comparison table here.

Trade Setup

• Strategy: Short Term Directional Bearish Trade.
• Target: $190
• Short Call Spread SPY 195/200 Oct 2014 (2 contracts)
• Max gain @ expiration $690
• Max loss @ expiration $310
• B/E @ expiration $198.44
• Reward vs Risk (RoC) = 2.25
• Probability OTM (short leg) = 29.42%
• Profit target = $540 (at $190 support)
• Exit Conditions:
  • When there is a trend reversal at the support ($190)
  • Break $202 resistance convincingly.
  • Reach 80% of Max Profit (ie. $552)

Original Post by Marubozu My Stocks Investing Journey