SPY long/short indicator

Here is a SPY long/short indicator I am working with. Got the idea from a forum on stockfetcher. If interested you can read more about it from my journal at ET. Right now the signal is long SPY since late August. Came close to calling a short recently, but did not go completely to a short signal.

Trading in Luxury

Trading in Luxury

Some General Thoughts on Trading

accept personal responsibility for own trading

accept "they" will trade for their own good, same as you

develop your world-view beliefs as they relate to trading

set dollar range goals for your trading

develop your own personalized, systemized trading plan(s)

trade both up-side and down-side

trading can be maket aligned, or market agnostic

accept losses as part of any trading method, and move on

have 3 simple strategies that you understand very well

set target price ranges, rather than specific prices

avoid paralysis by analysis

avoid tight stop losses

take losses, hold winners

profits, let them develop

avoid trading on stories and news

predictions, "sought after like cheese-burgers", about as meaningful

track your trade details in a journal

risk management and money management, how they are different

have a regime for position size, and scale in, scale out

consider campaign style trading

trade plan 5-28-2010, INTC @ $21.42

long jan (2012) 15 call @ $7.40/7.55 ($1.13 time value)
short jul 23 call @ $.40/.43, (5+%)


strategy outlook:
market agnostic, collect monthly income by selling short term calls against longer term, deep itm call
as replacement for long stock

time frame:
longer term trade, up to 18 mo.

risk:
if INTC drops to $15 (30%), could lose 100% of long call cost

reward:
approx 4%/mo.

monitor/management:
sold call strike needs to be above $ amount that does not lose long call value,
if short call goes itm, need to buy back, to keep from losing long call
if short call decays to 10% of its cost, buy back and sell more premium
monitor value of long call for possible action to capture any increased value, or avoid other loss
as get closer to long call expiry, will need to decide what to do, close, roll, exercise, or?

other considerations:
stock under $25, premium % usually better than higher priced, INTC tracks Qs,

watch out for:
div and earnings, and other single stock surprises

what i dont like:
single stock dangers, monitor/manage covered call strategy AND manage the long call

what i do like:
allows for a longer time trade with known risk and a hedged, levered position thru the long call @ $7.50
vs the stock @ $21.42

Sell in May and go away!

Worse May market  results since 1940!