Bears trapped and SQUEEZED again! Plan for trading SPY on Feb 2
How I was wrong and still got 500% on SPX 0DTE calls.
Did you get caught on the wrong side?
Yesterday we got the planned first leg of the short trade but then market reversed and the bears got SQUEEZED.
Let’s review how we traded the short, how and why we made a plan B and C trade for the long side after lunch.
I will also go over how I plan to trade today.
Introduction (for New Readers)
Welcome to my blog on Two Hour Trading, your daily source for market insights and trading opportunities. In this blog, I will provide you with a comprehensive analysis of the market, educational lessons, and trade ideas to help you stay ahead in your trading journey and best of all doing it less than two hours a day.
What Subscribers Get
Subscribers to this blog will receive daily updates on market analysis, educational content, and up to three trade ideas, all based on real-life examples and my personal approach to trading.
NOTE: screenshots from chat are from Edge Trade Planner. A platform available to my THT PRO and ELITE members. (I will open up new memberships in mid Feb)
What is Two Hour Trading?
It’s my system for finding and executing trades while spending less than two hours a day trading. My goal is to earn 100-300% on the capital I risk while waiting for 1000%+ gain trades to setup. Key benefits:
High Quality trades with great reward vs risk
Avoid Overtrading and losses from it
Trading to Win vs Trading to Not Lose
Stacking the deck in your favor
2024 Alert Leaderboard
(I’ve decided to include a leaderboard so you can see what potential the 2 Hour Trading System has)
The following is based on entry alerts.
Jan 29 - SPX 5910c. Entry $1 - High after $20 ($1000 —> $20000 potential)
Jan 26 - NFLX 570c. Entry $0.50 - High after $9.85 ($500 → $9850 potential)
Jan 25 - TSLA 185p. Entry $1.5 - High after $6.3 ($1500 → $6300 potential)
Jan 24 - SPX 4890p Entry $1.50 - High after $22 ($1500 → $22k potential)
Jan 24 - SPX 4880p Entry $0.50 - High after $12 ($500 → $6000 potential)
Jan 17 - SPX 4740c Entry $0.20 - High after $2.80 ($200→ $2800 potential)
Jan 17 - SPX 4740c Entry $1.20 - High after $12 ($1200→ $12000 potential)
**Past Performance is not indicative of future results
Thursday’s Price Action
SPY / SPX - morning action
We got my textbook trade trade setup providing a 300%+ gain trade! Two Hour Trading - Mission accomplished.
Now I wanted a 10-15 bagger, but if this is all I get. It’s good enough. My job as a THT trader is done.
I waited to see if vwap rejected to reload and start short again, but it didn’t. And now we are moving into lunch and my day s done. I made a plan to come back after lunch in case another trade setup forms.
Here is the execution of SPX 4940p.
Not bad! $1.20—> $4.50 to $6. Why am I selling? When the level below is so much further? It’s my process for being systematic in taking profits. If I get 300-500% gains. I am selling majority. Many times there will be a retracement to reload before the next major leg happens. Making 300% will keep your account growing! Don’t worry about 1000-1500%+ gains on leg 1.
SPY / SPX - afternoon action
Ok so after lunch I saw the push over 487.50 and fail. At this point I was planning for an afternoon reversal. I wanted a day 2 red day and consolidation day and then a gap down reversal for Friday. I can plan but as a day trader, I have to trade the action in front of me.
So I made 2 plans. Bear Plan and Bull Plan.
Bear Plan: SPX 4870p for $2 target 6-20 for exit. sell 50% at 100% gain (fighting trend) ride the rest. I was targeting low of day retest or break.
Bull Plan: SPX 4905c for $0.50 sell 30% at $2 for 300% and 50% at $3 for 500%. ride the rest . I was targeting 4910 watchlist level and bonus of 4920+ if we got a squeeze.
So how did it do?
both paid:
4870p - got 100% on half but the last 50% on 4870p went to 0 - so that is a wash
4905c - got both sell targets, and last 20% expired at $1+ for 100%+ gain.
Kind of pissed that 2 min after the close we got the squeeze I was looking for that would have given us a 20-30x payout.
AMD
I told members I expect AMD to squeeze over 175 toward 180 into Friday given the way it held vwap on FOMC day and again yesterday.
We are now gaping up into 174 in premarket.
Let’s see if a monster rip can come today.
Summary Review of Market Price Action
I’ve seen this FOMC full reversal before but I convinced myself they would do one more day of bear trapping before the squeeze would happen. I was wrong!
But that doesn’t mean I can’t profit from the price action. The big difference was making 3x or 5x vs 10x. All of which are great results and gains!
So the market action on names after the lows were put it was net constructive. Going back the one mistake I did make was using 489 as my bias instead of 486.50. If I had planned a little bit better, I could have bought the dips into 486.50 to scoop 4890c but when you look back at the chart. not sure it did much better than our 300-500% gains. The biggest difference is few contracts and so less commission costs.
Given the gap up, this puts us within striking range of the 495 target I had before profit taking comes.
Bottom line. If you look back, every dip in market has been bought since December. Bears keep trying to be first in on the reversal short and keep getting crushed.
Educational Lessons
From the price action review you should have learned the following:
Take profits systematically
Don’t get hung up on a direction. Make bull and bear plans and let the market pay you which every way it goes.
You can still make 100%-500% gains being wrong on targets!
Be patient and wait for great risk/reward dip price entries on contracts (I’ve mastered the art of estimating dip entries). Over time you will too.
Edge Trade Planner - Top Scan Alerts
Nice finds again. I found a bug that I’m tracking down the 4900c and 4895c were reported late and not actionable.
Trade Ideas - Plan for Friday Feb 2
Stick to process. The process and trade setups I teach works. Rinse and repeat over and over again. There will be losses. Any good system will have them. Being systematic also means the gains will repeat and come again too. If you keep changing your system/process trying in an effort to never lose a trade, you will never get to where you want to go.
With this market gap up how do I plan to make 100-300% gains (shooting for 500%) in less than 2 hours… read on to find out.