BTFD again. SPY at Key level ahead of PCE. NKE destroyed! Plan for Friday Dec 22

Also. How Edge can generate a great trade plan

SPY Price Action Review (Education)

Morning Session

This was tricky and I wasn’t sure which way market would develop.

The longer we took to not be able to get over 472.50 the more bearish I was because.

So I made bull and bear plans. I figure 4700p for $1 is a great risk/reward if a dump develop. It would at least spike to 4 on a dump and could run to as high as 8-12 if we got to 468. I also did credit sell with tight stop.

We ended up getting a failed breakdown and a failed breakout over the next hour. Choppy indeed!

The bull puts were looking good but after seeing the failed breakout I figured it’s worth doing bear calls. This would subsidize any red on the bull puts.

We eventually flushed. Got stopped on the bull puts though holding till end of day and/or adding at lows would have paid out nicely.

The 4700p spiked to $5 for a great exit.

Afternoon Session

Yesterday I planned out 3 or 4 scenarios. One was for a 469 dip and vwap reclaim triggering a move to 473. The key reason was that per premarket prep, as long as we don’t close under 468, the strong upward trend is intact. we basically back tested the 9ma on the daily. BTFD is still the name of the game.

Experience has taught me that rather than wait for the reclaim, anticipate it, and get in for the payout.

So let’s walk through it. We got a failed breakdown reversal on 469. This setup has about a 83% win rate for me so I want to get long.

So we watch the price action more and let contracts bleed, and then we can use edge to plan trades. Here is a video for how to do it using Edge. Please spend the 5 minutes to watch it.

I was kicking myself when I went back to test the planner after selling too much too soon on the calls I scooped. After the morning whipsaw I was way too cautious and getting 1.50→4 is great right on 4530c right? Wrong!

I was happy with 4 but sizing down to 10% runner size hobbled my profits massively. The contracts went to over $16!

So one of the key things in Edge is I like to go into what if mode, and see what plan edge would have generated at various times. It is crazy good at identifying dip buys and sell targets! It is helpful in helping me go back and review how should I have planned the trade, what size should I be using, etc.

I fell into bad habits. Making trades off the cuff again and not using the planner every trade every time. So I will make that change over the next week and will report back.

Want to try Edge Trade Planner? Leave a comment/send me a message.

NKE Destroyed

A friend suggested NKE calls to me. Given the BTFD mania, I thought it wasnt a bad Idea and decided to join the 135c for 1/12 but with a twist. Why not stack the deck?

The 1/12 135c were $0.90 with a 0.40 delta and and the 12/22 130c were $1.10 and a 0.15 delta. So buy the 135c and sell the closer dated 130c to get a credit of 0.20.

So if NKE dumps, I make $100 or $200 per 10 contracts and if it spikes, to say 132. then by end of day today the 130c for today would be -1900, but the 135c would be +5500 ish.

The point of the story is if you want to trade earnings there are great risk/reward ways to do it and maybe this strategy is something to consider.

On to the the report. NKE reported a slow down in expected revenue and that they were taking efforts to reduce costs by $2b.

Hopefully they leave something for us by open. If we open and reject 112-114 area, I’m came to take 110p targeting 100-105.

Plan for Friday 12/22

PCE has the potential to be a strong catalyst for SPY triggering a move higher or lower.

I am planning for one of the two scenarios above to play out. We could be very close to a corrective move. I just don’t know where that top will be. A break of yesterday’s lows/wed lows should bring a fast dump.

Over 474 puts us back on track for 479 and maybe even 482 into next week.

Please note the level shown above are a day old. be sure to subscribe to Daily Market Edge to get the latest watchlist and levels.

So going to make the plan simple.

Over 473.50, I’ll take 4770 SPX calls

Under 468, I’ll take 4650SPX puts.

I’m a broken record. Follow process. Use the levels, look for failed moved for reversals, plan the trade and then execute.

Today should give us at least one maybe as many as 3 tradable moves.

Other names:

NVDA 0.00%↑ - like 500c for next week on dips. swings from 482 on wed and yesterday lows working

NKE 0.00%↑ - will watch for trend. Let’s see if NKE fanboy do BTFD or if they unload it.

MU 0.00%↑ - 86c on a dip under 0.20 might work but the move feels forced.

TSLA 0.00%↑ - upgrades, watching dips, like 260c for next week. or 257.5c on a dip.