SPY Put Trade Returns 100% as SPY Approaches Our Downside Target
by Mike Paulenoff
April 12, 2014 • 12:00 AM EDT
On Tuesday (April 8), Mike added the April 11 SPY 184 Put to the MPTrader short-term portfolio at a price of $0.93. He was looking for the underlying SPY, which was trading at 184.49/50 at the time, to fall into the 181 area into expiration on Friday.
The SPY indeed fell to under 182.00 on Friday morning, pushing up the put price to $1.83, at which point Mike issued an exit alert for a 100% return on the trade.
Having broken key support between 183.75 and 183.60, locking in the Feb-April action as a top formation, the SPY has a next downside target of 178-176.
See chart below from Tuesday.
Mike Paulenoff is the author of MPTrader.com, a real-time diary of his technical analysis & trade alerts on
ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international
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More Top Calls From Mike
In our Top Call article a month ago, we told you about how Mike Paulenoff called AAPL's upside continuation, with the expectation that the stock could extend a little higher before upside exhaustion.
AAPL, indeed, went on to stair-step higher to reach a high of 157.26 high last week, overshooting the upper boundary of Mike's 153-156 projected high-zone by just 0.8%. It then proceeded to initiate the expected bout of weakness that accelerated to the downside this past Friday.
On August 11, Mike Paulenoff alerted MPTrader members to a significant upside reversal signal in AMZN.
Mike wrote that "the 500 point decline is nearing downside exhaustion," noting a preferred downside target zone of 3180-3200.
Fast-forward to August 20, when AMZN pressed to a new multi-month corrective low at 3175.76.
On August 3, Mike Paulenoff alerted MPTrader members to the developing setup in AAPL that also would eventually impact the broader market:
Mike wrote: "AAPL continues to levitate within a high level digestion period and pattern off of its ATH at 150 hit on 7/15. All of the action since mid-July certainly resembles a Triangle pattern atop the May-July upleg from 121.68 to 150.
Probably the first price pattern both fundamental and technical investors learn to recognize is a Head and Shoulders Top. Rightly or wrongly, it is the Holy Grail of technical formations, striking fear into holders of the stock, index, ETF, or commodity that exhibits such a technical set up, while eliciting an opposite reaction from put owners and short sellers who anticipate huge gains captured by impending weakness.
Last Wednesday (July 14), with AAPL trading at 148.65 but off of its new all-time high at 150, Mike Paulenoff alerted MPTrader members to potentially consequential yellow caution flags emerging in his technical setup work.
Mike wrote:
This morning, JPM raised its Target Price to 175, one day after Citigroup raised its Target Price to 170. Do I hear 180... 185? Crickets at the moment. The Street is falling all over itself in its bullish view of AAPL.
