Big Red day followed by Big Gap Up. Will SPY close green today? Trade Ideas for Tue Apr 22
Are you planning your trades? Do you know when not to trade?
I’m usually pretty good at identifying possible bounce/reversal spots but yesterday’s bounce and this mornings gap up has caught me by surprise. I was expecting a retest of 500 to come before we got a big bounce. That said, my levels yesterday of 509 was a 4 level move. And we caught the squeeze from the bounce on 509 to 515, but the move past 515 is where I was surprised.
This goes to show how unpredictable the market is right now. There isn’t any news that clearly driving the market actions right now. Neither the sell off or the reversal and gap up that has nearly recovered the losses since yesterday’s open.
There is a lot of finger pointing, but imho, it’s just plain weird action.
So I was slow on the trigger yesterday / alerting on the short side, but alerted the long on SPX 5150c which ran from 2 to 15. Unfortunately I got out at 7.
So the big question is, what will happen today?
Let’s review the chart and I’ll go over the ideas I have.
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Trade Recap for Mon Apr 21
GOLD BOLD ITALIC = price action signal
WHITE REGULAR = action to take/taken
GREEN REGULAR = trades I should have taken
SPY / SPX
Pretty clean action but I hesitated a lot because I was trying wrap my head around what is gong on with markets.
As you can see we have a. 4 level drop from the open and 5 level drop from previous close. As a general rule after a 4+ level move, I look for reversals though yesterday I got overly short biased and was thinking we were headed for a 6 level move.
So i had a 100%+ gain on my shorts, but minimized profits because I was thinking I was going to get a big pay day.
Luckily got a 200%+ payout in the squeeze in last 30 minutes.
After hours, SPY cleared 515 and I got stopped on my overnight short. for 40% loss.
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Education - How to Join a Strong Trend
The process I typically follow for joining a strong trend are as follows:
All day grinder: join on dips to 20ma
Multi-day grinder:
Join either on support test of morning lows/failed breakdown reversal
Join at vwap mid day or end of day
Keep it simple. Don’t chase, wait for support levels for great risk/reward entries!
Education - Systematic Profit Taking
How do I take profits? I keep it relatively simple. Depending on the entry and range to the next levels I typically with take profits 50-100% of my profits at 3-10R and then raise stops to above entry with a goal of letting runners take me to the next level or 2 and to then reload if I believe we are consolidating before the next leg.
I then repeat the same process on the reload.
Trade Ideas - Plan for Tue Apr 22
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.
Ideas
Overnight action shows a squeeze that was triggered by vwap reclaim and then clearance of 515 and 518 levels. That explains the push into 521. The question is what does SPY do from here.
BABA is also gapping up strongly after recently dipping to backtest the 9ma.
Meanwhile I find it strange that Gold has hit a record high overnight and SPY is gapping up as much as it has.
Here are my top ideas for today.