Did 573 backtest for bulls setup the next leg higher? 588 and 582 are key. Trade Ideas for Tue May 27
Did we just gap fill before more selling? or will the rally continue
SPY / SPX
Let’s get the big picture idea out of the way and then talk about Friday. On Friday I wrote that the 573 dip was a swing long opportunity for bulls and that we should be looking for a bounce there.
Friday…
We got just that. We got a rip out of the gate and then a flush in the last hour back into vwap.
However… given the option pricing It was a very difficult to find a 10x trade. The contracts were just too juiced all morning and most of the day.
Here is what the 5820c looked like…
about 100 to 200% was the most one could get out of the trades and one had to wait to nearly 1pm to get decent risk/reward entry
I got chopped in the morning due to lack of follow through.
Next trade Idea…
Finally we started hawking for a short into the close. However the selected strike was wrong. We made money but the better trade would have been taking SPX 5810p and 5820p for less risk.
These yielded between 200-400% in last 15 minutes.
Swing Shorts
IDEA: SPX 5750/5600p for May 30
Overall it was our swing trades that paid super nicely. The 5750/5600p swing from $10→50 for 400%
IDEA: June AAPL 210p for June 20
These went from $6 to $17 for 180%
OVERALL TAKEAWAY FROM Last week’s price action:
Identify Sell price targets and if not at least 200%+ reward, wait. Or stick to rules and only accept 500% reward trades opportunities.
Price action and volume might be coming back in after 1pm instead of just after 3:30pm.
I will be testing results this week by trading only after 1pm for this week. 100-200% gainer trades aren’t worth my time for the risk/reward.
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
If you are busy and want to see my commentary and ideas in real time consider joining THT-PRO.
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 Tues May 27
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:
SPY gapped up past 582 and ran to 588 and is dipping toward 586
QQQ gapped up from 509 to 518
The question we are faced with is this a reversal or is it filling the gap from last week’s break down? For us it doesn’t really matter. What we need to do is identify price action. at the key levels for solid risk/reward trades. Here is what i’m planning…