Why did I not short the market?

I have several reasons why I did not end the day shorting the S&P. First and foremost my marked price for 1075/1100 SPX weekly puts were not triggered, therefore the trade was out of my risk/reward range. I had no control over that, my instincts just told me not trade it. The premium for puts in all indices seemed to high for my taste. That leads me to the second reason of not shorting the market, to much negativity.

Second, the trend is pretty much negative, too negative that is. Everyone I am hearing expects a bad housing number tomorrow and is shorting the market. From what I have seen last Tuesday when a bad number did not come in as expected the market rallied more than 1%! The lack of trade volume effects the market significantly due to lack of conviction both in bulls and bears. The bears have a slight advantage over the bulls tomorrow, but I am afraid any positive outcome from tomorrow's housing number will only raise the market.

Technically the SPY should continue to go down, but something did not jive with me. The chart above shows that the $tick rating has been towards +1000 more often than -1000 near the end of the day, illustrating institutions are buying even on the end of the day drop. For support on the SPX there is the 1064, last Friday's low, 1060, and the 1050.

For types of trade I am looking going into tomorrow. If the market drops significantly I will look to sell weekly puts. For the SPX the 1000 and 1025 and for the NDX 1700. The market would have to be crushed in order for the ranges I just listed to be hit, not saying it is impossible. If the market rallies then selling calls 1100 on the SPX and 1880 on the NDX. For the week I am concentrated in collecting premiums on options, because I am getting set to go short once September rolls around. I will be trying to save some capital for a big short and expect to position myself before labor day weekend due to jobs report the first Friday of September.

6-23-09 End of the Day Update

First off I have decided not to produce an excel spreadsheet of my trades for 2009. Too much work. Yet I will somehow present my results graphically maybe with a line graph. Although I am still in the negative for the year I am slowly chipping away at the red. Patiently I am awaiting to get on the green side very soon and stay there for the rest of my life, lol.

Anyways nothing much happened today in the market. Not really surprising after the housing data was released. The news just was not enough to provide green shoot followers to have any momentum to push stocks higher today. Below is a graph of the daily chart of SPY.


Right after the housing data at 10am the SPY tumble below its daily vwap-pink line, which to me indicates a weakening in equities. However right around 888 SPY found support and pulled onto the vwap. The rest of the day the market try going higher but every time it failed and hit the vwap line. The SPY never gained any type of momentum to the upside even after yesterday's significant losses. This leads me to believe traders are uncertain about the market. With uncertainty comes lack of optimism and that makes the market sell off.

Tomorrow will be interesting to see if stocks can end positive. FOMC will post their results of their meeting around 2:15pm(Est). Anything can happen depending on what the FOMC says. Yet the trend seems to continue from last week which was a down week. So I would rather stay away from the market tomorrow until the FOMC results if all possible. It is too uncertain with the market being neutral today and usually any major news will result in major swings either up or down. In the long run I feel the market will go down due to the uncertainty.