face down friday, page-147

farsight

Have you thought about tightening your stop and maybe increasing the size of your position? A stoploss of 100 points on the SPX might be considered a little extreme (even for a longer term trader such as myself.) Your risk/reward ratio may also be a little out of whack I think.

The ATR(90) for SPX is currently 23.61 points and the ATR(14), which is I think your favoured measure, is currently 26.71 points. By either measure, your stoploss is therefore set at about 4 times the average true range from Friday's Close.

A 4 times ATR stoploss (or 100 point stop) with a pretty standard risk/reward ratio of at least 3:1 implies a profit target of 12 times ATR, or 300 points. This would be some 50 odd points above the SPX all-time high set in October: a target of 1625 at the very least (even higher if you entered the position somewhere above 1325.)

Even if you reduced your profit/risk expectation to 2:1, your profit target must be at the very least 1525 - a very long way up from here that will not be quickly achieved. The SPX last traded at 1525 on 01 November.

Mind you, I think that the SPX is a big chance for a pop early in trading next week but a quick rally to above it's previous highs is hard to contemplate right now.

Just my thoughts for what they're worth.

Regards

-HBG

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Trade the market you see - not the market you hope for!