Classic Gap Down Reversal Setup Pays again! How high will SPY get today? Trade Ideas for Thu May 1
Are you planning trades that pay over 300%?
Yesterday we started off will a small trend join to downside, but prepared ourself for a gap down reversal. Why? Because it is one my core trading setups. We got a failed breakdown reversal at a key level. 547.50, and from there, the net bias was to see 553. And as I wrote if 553 clears, a big squeeze. Here we are at almost 562 the next day.
When you have news, and people load up short, and don’t respect trend, yesterday’s squeeze is what develops.
Overall the SPX 5500 calls we scooped eventually hit over $80 our original scoop was $9-12!
I also alerted SPX 5530c for under $5, these dipped to $2.5 and my target was $17.50. With the squeeze that triggered, these hit $50! Unfortunately my last sell was at 22. I had not mentally prepared myself of 553 breakout even though that was on the menu per premarket thoughts. (Shaking my head at myself).
Check todays recap for process…
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Overnight Action
SPY continued it squeeze afters. Closing at 554.54 and reaching 562 overnight. Currently 561
MSFT and META reported strong results with MSFT almost back within striking range of all time highs! Currently 431 and all time highs at 468. Less than 10% away!
META has cleared the 200ma.
TSLA initially gapped down but since recovered. Triggered by WSJ article that Tesla board is looking for a new CEO.
What is Two Hour Trading?
Two Hour Trading is 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 set up. Key benefits include:
High-quality trades with excellent reward vs. risk
Avoiding overtrading and losses from it
Trading to win vs. trading not to lose
Stacking the deck in your favor
Trade Recap for Wed Apr 30
GOLD BOLD ITALIC = price action signal
SOFT YELLOW = thinking/anticipation
WHITE REGULAR = action to take/taken
GREEN REGULAR = trades I should have taken
SPY / SPX
Another great example of why waiting the first hour is essential.
We took short based on opening action, but the trend exhausted quickly. After the first hour it became clear we could have a failed breakdown reversal on hour hands. The big unknow was what will happen at 548 and 550. Sow we take procifts. We then had consolidation for a few hours. Notice the failed breakdown during lunch. I was away and missed my dip buy reload order from getting filled by $2-3 :(
By the time I got my screen loaded on my phone my risk reward entry was missed. I was trying to buy at 8-10, then 12-14. but was 15 and ran 20+. I couldn’t chase it.
So during late after noon I was still out running errands and trying to get home in time for 3:30 but the driver was delayed so did the best I could from my phone.
For last hour I was unsure if squeeze would come or a dump so I was positioning into 5500p and 5530c. Why because any big move in either side would easily pay for the loss.
I had order in for 1.75 on 5530c it dipped to 2-2.50 but some THT members were hawking the action and scooped before me. I then chased and bought at $5.. why? I alerted that I like it long under $5. so that was my max buy price. So even though paying double from the lows, It was with a minimum 300%+ reward I was looking for.
GET EXCITED. I’ll be publishing a book called Trading To Win: Stop trading to NOT lose. Title is still in the works. I plan to include exercises to help you improve your mindset and your trading. Leave a comment or send me a message if interested in the book. My birthday is coming in May - I hope to release this before then.
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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 or failed breakdown reversal at key level
Join at VWAP mid day or end of day
Keep it simple. Don’t chase, wait for support levels for great risk/reward entries!
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 Thu May 1
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
Wow what a gap. In theory we should be looking for a gap up reversal and profit taking as the first move, but it feels like we could see another squeeze out of the gate. Let’s see what comes.