SPY Chart – Back up to Resistance

I charted SPY before the markets opened after it closed within a few cents of its high of the day yesterday at $104.79.  With a close at its highs yesterday I expected a stronger opening this morning, but the chart shows the S&P 500 ETF is hitting resistance again at the trend line of higher highs.

The top trend line I drew comes from the highs of January and I’m not sure it’ll hold wait, but wanted to note it since it’s dead on where SPY finished yesterday.  The three other lines seem to hold more power in their support and resistance levels.  With SPY trading at the top of the range of those three, lower seems the easiest direction for it to move.  Of course it could go sideways for a few days and then will have more room to the upside again, but a pull back to at least the trend line currently around 100 would make the rally seem more realistic.  After five positive days (on weak volume) for the index (and ETF) you’d think we’d get a down day mixed in – kind of the two step forward one step back mentality.

I have a short option strangle on SSO (2x SPY ETF) with September 30 naked puts and September 32 naked calls.  With SSO trading at $33.58, I can only hope I’m right within the next week before options expiration.  I might roll the calls if I don’t see a pull back before expiration.  Eventually SPY (and SSO) will have a down day and that’s when I’ll plan to exit.  It’s a small enough position that I’m not risking much by letting it ride for now.  Including both legs I’m still sitting on a paper profit and would like to end it that way if I don’t screw it up.