SPY Second Round

Today I felt emotional after a loss, it hasn't happened in a while. Mostly because I knew that when having losses with individual stocks was due to me not following my own rules.

SPY loss was frustrating because I didn't understand it and it really put me in a bad mood today. However, I want to address SPY performance today based on yesterday's analysis and then what I plan to do about it.

So although I was correct in saying SPY would go down, and we see above it reached lower lows than the previous day (May 15), it also closed just cents short of the previous close. The mistake I've made with SPY is that I've treated like an individual stock, and I have to change my approach on it if I want to succeed in the indexes.

I will continue to monitor SPY in the background, even if I don't trade it, and I will include it in my blogs for accountability and for logging purposes. Once I feel confident with an angle, I will go back in. In the meantime, I'll revert back to individual stocks.

SPY Approach

Given SPY is made up of 500 companies, I have to tackle it from the sectors angle first. While there are different sectors that contribute to SPY, XLK is the heaviest contributors with a 37%. This means that more often than not, XLK will dictate how SPY will behave on a given day or even week. Now of course, there could be some rebalancing happening. What I mean is, if XLK is down, but all the remaining 63% are trending positive, then we could witness an uptrend with SPY – it's about maintaining the balance when surfing the waves.

The above chart gives us all the percentages allocated for each sector. Based on this, let's now look at today's performance across them.

As we see, XLK was down -1.1%, and this was a recovery towards the end of the day. At some point, it was down by almost -2% which contributed to the $734 low SPY. However, if we look at Financials (XLF), Communications (XLC), and Healthcare (XLV), we can see that they were positive. Contributing to a total of ~30% positive of SPY. Had these three sectors also been negative like XLK, then SPY would've trended much lower than it did.

Based on the above and given that I saw XLK have a bit of recovery during the end of the day, we can probably see a bit of horizontal behavior for SPY tomorrow and have a $738-$742 range. On the flip side, if XLK trends higher, we can see that $742 resistance be broken.

Back to Individual Stocks

As I don't like to trade XLE (too unstable during war for my taste), I will focus on the staples XLY.

I'll consider Amazon depending on how the first 30 mins go tomorrow. In the above we see the two days of uptrend, healthy RSI, and Amazon has closed just below the 20MA, which gives us room to break that tomorrow.

Now, aside from Amazon, I almost want to consider Google, even if it's not part of XLY, the only reason being that I just got new notification that Google and Blackstone will partner up to create an AI cloud company. This alone may push XLC tomorrow.

While today's google chart doesn't fit my method, the news are definitely something that will make it reverse tomorrow.

I want to make a disclaimer: While I don't recommend my method for anyone who cannot afford to lose money, I do it for me. The reason I do it with myself again, is because my success rate has worked for me, and me blowing my account has been on times when I didn't follow my own rules. In addition to that, when I started this journey I came in willing to lose in the beginning stages of it and Month 4.5 has been both high ROI and also blowing it up. I'm thankful I'm in a position where I can use this premium to learn and navigate the stock market to make better decisions, and I am also not sacrificing thousands, I'm sacrificing $100-$200 in losses (when there are).

I think today was emotionally charged for me at the beginning, but also grounding in a way. It brought me back to not complicating it, and to trust my own judgment. Tomorrow the rules apply:

• Not trading within the first 30 mins
• Setting a 25% loss and trailing it if it moves
• Not holding overnight

Let's see what the big ocean has for us in store for us tomorrow with Amazon, Google, and SPY monitors.