Markets take profit yesterday ahead of Powell's speech but have recovered 50% overnight. Trade ideas for Friday Aug 23, 2024
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Good morning traders!
There should be plenty of opportunity develop today after Powell’s speech. I was originally short biased on the basis that everyone is so long biased. After yesterday’s flush, I’d say market had a bit of a reset and now we can go in either directions.
I nailed the short entry yesterday by following process and looking for gap fill, but came into the day strongly long biased. That said once 558.30 broke, I flipped short biased. As we approached vwap over lunch, I tried to get home as quickly as I could from the gym, but market dropped before I could get in. This led ot a lof of waiting and chop. I ended up give back 1/3 of my morning gains from the chop. Yielding only 4% account growth. :( I was expecting a 20% growth day and would have got it if I skipped the gym. But I stick to process, and taking care of health is job #1. missing entry over 20 minutes is a bit scalding though. (I’m bitter)
I’ll explain my reasoning the trades/positioning and more importantly what made getting short AFTER missing the right entry so difficult to plan.
Good education in today’s blog so lets’s get into it.
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Overnight Action
Overnight, off the afternoon flush, the market is grind up into the 559-560 area. This is essentially the pivot area imho for bulls and bears. I’ll be watching reactions to 560 today to place bets.
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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
2024 Alert Leaderboard
Here's a look at some of the potential gains achieved through our entry alerts:
Aug 22 - SPX 5600p $7 → 38 ($7000 → $38000 potential)
Aug 21 - META 535c $3 → 8.50 ($3000 → $8500 potential)
Aug 20 - SPX 5600p $4.50 → 15 ($4500 → $18000 potential)
Aug 20 - SPX 5580p $2 → 7 ($2000 → $7000 potential)
Aug 19 - SPX 5600c $0.4 → 8.25 ($400 → $8250 potential)
Aug 15 - SMCI 600c (swing) $2 → 38 ($2000 → $38000 potential)
Aug 15 - SPX 5540c 0.50 —> 3.50 ($500 → $3500 potential)
Aug 14 - SPX 5400p 5.50 → 10 ($5500 → $10000 potential)
Aug 14 - SPX 5450c 4 → 10 ($4000 → $10000 potential)
Aug 14 - SPX 5450c 1.50 → 10 ($1500 → $10000 potential)
Aug 14 - SPX 5460c 0.20 → 3 (0.10 entry goal, took small 0.20) ($200 → $3000 potential)
Aug 13 - SMCI 600c swing $2.5 ($2500 → $10500 potential)
Aug 13 - SPX 5400p 17 stops 15 ($1700 —> $2300 potential)
Aug 12 - SPX5350c $8 stops 7 ($8000 → $25000 potential)
Aug 12 - SPX5340c $0.5 ($500 → $4500 potential)
Aug 09 - NVDA107c $0.2 stops .10 ($2000 → $7000 potential)
Aug 09 - LLY900c $3.50 stops 1.50 ($3500 → $11500 potential)
Aug 07 - SPX 5280p $10 stops 8 ($1000 → $8000+ potential)
Aug 07 - SPX 5200p $1 stops 0.5 ($1000 → $7000+ potential)
Aug 07 - NVDA 100p $0.8 stops 0.4 ($800 → $3300+ potential)
Aug 06 - SPX 5250c $10 stops 8 ($1000 —> $6000+potential)
Aug 06 - SPX 5250p $1.5 stops 0.75($1500 —> $13000+potential)
Aug 05 - SPX 5300c $3.50 stops 2.50 ($3500 —> $11000 +potential)
Aug 02 - SPX 5350p $5.50 (overnight swing from Aug 01) ($5500 —> $45000 +potential)
Aug 01 - SPX 5480p $4.50 ($4500 —> $65000 potential)
July 31 - SPX 5520c $12 ($1200 —> $3390 potential)
July 30 - SPX 5430p $2.50 ($2500 —> $30000 potential)
July 30 - SPX 5400p $2 ($2000 —> $10000 potential)
July 30 - TSLA 220p $1.50 ($1500 —> $5000 potential)
July 30 - SPX 5450c $0.20 ($200 —> $5000 potential)
July 29 - SPX 5450p $4.50 ($4500 —> $16000 potential)
July 29 - SPX 5460p $0.20 ($200 —> $1100 potential)
July 29 - SPX 5470p $1.5 ($1500 —> $8000 potential)
July 29 - SPX 5480c credit sell - collect $2700 risk $500
July 29 - SPX 5400p $2 out $6 ($2000 —> $6000 potential)
July 26 - SPX 5400p $2 out $6 ($2000 —> $6000 potential)
July 26 - SPX 5450c $4 out $12 reached 15.50 ($4000 —> $15500 potential)
July 25 - SPX 5450c $1, $1.50, and $1.75. target $10. reached $10! ($1000 —> $10000 potential)
July 25 - SPX 5450c $5. reached $41.70! ($5000 —> $41700 potential)
July 22 - CRWD 240p $1.7. reached $3.5! ($1700 —> $3500 potential)
July 22 - SPX 5580c $0.5. reached $3.3! ($500 —> $3300 potential)
July 19 - SPX 5500p $2. reached $12! ($2000 —> $12000 potential)
July 18 - SPX 5580p $5. reached $53+! ($5000 —> $53000 potential)
July 17 - SPX 5540c $2. reached $16! ($2000 —> $16000 potential)
July 16 - SPX 5660c $2. reached $10! ($2000 —> $10000 potential)
July 15 - SPX 5650c $1. reached $4! ($1000 —> $4000 potential)
July 11 - SPX 5600p $2. reached $23! ($2000 —> $23000 potential)
July 09 - Credit Sell SPX 5590/5595 bear calls 2.30-2.50 stops at 2.60 ( $2500 premium collected per 5k position risking $300)
July 08 - AVGO 1800c 13( $1300—> $2250 potential)
July 08 - SPX 5560p 2.50 stops 2.30 ( $2500—> $5000 potential)
July 08 - TSLA 270c 4.50 target 7.50 ( $4500—> $7600 potential)
July 03 - SPX 5520 2.5 ($2500—> $18000 potential)
July 02 - TSLA 225c 3.5 ($3500—> $8500 potential)
July 02 - SPX 5500c 2.50 ($2500 —> $10000 potential)
July 02 - SPX 5470 Bull Puts 2.50 ($2500 credit collected)
July 01 - closed TSLA Swing $2.65—> $12.00
**Past Performance is not indicative of future results
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Trade Recap for Thursday Aug 22
SPY / SPX
Following process on gap ups, with strong trend, my first goal is to get short looking for gap fill. and then flip long. I did exactly that and it paid for the initial trade and then left runners targeting 558. My secondary thesis on if was that we would bounce off 558, but that broke flushing into 557. THAT BREAK IS THE SIGNAL FOR MORE DOWNSIDE. however we are far from vwap, and I also expected a bounce into 560 to back test the support and with 558 reclaimed a possibled failed breakdown reversal if 560 reclaimed. So I took bull puts after the put side mission accomplished was met and went to the gym. I had 2.90 average on bull puts and orders to lock in at $1 and 0.50. $1 filled, 0.50 did not. and I got stopped at 2 on the balance.
There are few things to learn from the chart above. NOTE: I Added signals for one to recognize in bold italics
Notice the 15 min ORB rejection to get short
When vwap was reclaimed stop out or risk 50% for larger thesis.
When vwap was broken a second time with a mini pop rejection at around 10:05am. that is the signal to load up short again
Following process I lock 50%-80% at r/g line and left 20% in case more downside.
Locked the runners on the 558 candle flush. That was 2 level move captured. MISSION ACCOMPLISHED
around 12:30 a triple top at 560 formed. GO short. — THIS WAS THE CLEANEST SHORT SPOT
after 558.30 broke again, I was hesitant to chase. but 15 minutes later we got a pop to back test 558.30 and there wa a small window to get puts. The biggest concern I had was the cost of the contracts and that 556 level was only 1.5 points away and vwap was 2.5 points above. I don’t love entering in this situation. and I was not convinced we would get to another level below 556. Timing was so important in this zone, that I still got chopped up though I was right.
SMCI
I tried a long on SMCI because of my bullish view but got stopped for 50% 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.
Let me know in the comments if you have questions or would like to see examples, I’ll share them.
Trade Ideas - Plan for Friday Aug 23
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
Stick to process. I will likely wait 30-60 minutes after Powell’s speech before opening a trade unless major levels are tested that give insane risk/reward opportunity.
Ideally market breaks out of range today taking SPY to all time highs or headed toward 550