SPY got 2 RED days, will the multi-month BTFD algo kick in again?
SPY got 2 RED days, will the multi-month BTFD algo kick in again?
Fed chairman Powell speaks at 12:10pm
The best laid plans can get wrecked. That’s how I felt yesterday morning. By market open I had to rework the ideas I had published in the blog because we gapped down so much. I really wanted to load up short on SPY 518 break, but how the break happened killed it. I was looking for a dip, maybe to 518 pop back 520 with a failed breakout and then a late afternoon break of 518, that would have been the setup for a 10-12 point flush from recent highs.
So what does one do when the planned moves you had happen overnight? You rework the plans and you look for gap reversals.
In today’s blog I’m going to cover yesterday action, credit selling, how to recognize and take advantage of gap reversal trades (82.3% win rate), and finally trade ideas for today.
Introduction (for New Readers)
Welcome to my blog on Two Hour Trading, your daily source for market insights and trading opportunities. In this blog, I will provide you with a comprehensive analysis of the market, educational lessons, and trade ideas to help you stay ahead in your trading journey and best of all doing it less than two hours a day.
What Subscribers Get
Subscribers to this blog will receive daily updates on market analysis, educational content, and up to three trade ideas each morning, all based on real-life examples and my personal approach to trading.
NOTE: screenshots from chat are from Edge Trade Planner. A platform available to THT PRO members. Join Us for live commentary and planning. Note my goal is to actively trade less than 2 hours a day finding 1 to 4 great trades a day.
What is Two Hour Trading?
It’s 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 setup. Key benefits:
High Quality trades with great reward vs risk
Avoid Overtrading and losses from it
Trading to Win vs Trading to Not Lose
Stacking the deck in your favor
2024 Alert Leaderboard
(I’ve decided to include a leaderboard so you can see what potential the 2 Hour Trading System has)
The following is based on entry alerts.
Apr 2 - SPX 5175/5170 bull put - Entry $1.50 ($1500 premium potential)
Apr 2 - SPX 5205/5200 bull put - Entry $1.50 ($1500 premium potential)
Mar 27 - SPX 5230c Entry $1.20 - High after $19 ($1200 → $19000 potential)
Mar 26 - SPX 5215p Entry $1.20 - High after $11.50 ($1200 → $11500 potential)
Mar 25 - SPX 5210p Entry $0.50 - High after $6.50 ($500 → $6500 potential)
Mar 22 - LULU 390p Entry $1.25 - High after $5.7 ($1125 → $5700 potential)
Mar 21 - SMCI 1000c Entry $4.80 - High after $22.60 ($480 → $2260 potential)
Mar 21 - SMCI 1000c Entry $4.80 - High after $22.60 ($480 → $2260 potential)
Mar 20 - SPX 4200c Entry $7.50 - High after $27.12 ($750 → $2710 potential)
Mar 19 - SPX 4170c Entry $1.10 - High after $11.30 ($1100 → $11300 potential)
Mar 18 - GOOGL 147p Entry $0.65 - High after $1.71 ($650 → $1700 potential)
*runner reached $2Mar 18 - SMCI 900p Entry $10 - High after $30 ($1000 → $3000 potenital)
*runner reached $60!Mar 14 - SPX 5150c Entry $3 - High after $10.50 ($3000 → $10500 potential)
Mar 12 - SPX 5150c Entry $4 - High after $27.50 ($4000 → $27500 potential)
Mar 11 - SPX 5120c Entry $3 - High after 7.50 ($3000 → $7500 potential)
Mar 8 - SMCI 1150p Entry $5 - High after $56.20 ($500 → $5620 potential)
Mar 8 - AMD 220c Entry $0.50 - High after $7.65 ($500 → $7650 potential)
Mar 7 - SPX 5175c Entry $0.50 - High after $2.40 ($500→ $2400 potential)
Mar 6 - SPX 5120c Entry $3.50 - High after $12+ ($3500→ $12000 potential)
Mar 5 - SPX 5070c Entry $0.50 - High after $10.75 ($500 → $10750 potential)
** alerted 0.30 entry wanted. dipped to 0.40. entered at 0.50Mar 5 - SPX 5070p Entry $1 - High after $13.50 ($1000 → $13500 potential)
Mar 4 - SMCI 1200c Entry $33 - High after $61 ($3300 —> $6100 potential)
Mar 1 - SPX 5120c Entry $2 - High after $20 ($2000 —> $20000 potential)
Feb 29 - SPX 5095c Entry 0.50 - High after $10 ($500 —> $10000 potential)
Feb 29 - SPX 5100c Entry 0.30 - High after $5+ ($300 —> $5000 potential)
Feb 27 - TSLA 195p Entry 0.90 - High after $2.30+ ($900 —> $2300 potential)
Feb 26 - SPX 5070p Entry 0.20 - High after $2. ($200 —> $2000 potential)
Feb 23 - NVDA 800p Entry 2.50 - High after $25.11 ($3000 → $25110 potential)
**Dipped to 2.57 (had to chase entry 3)
Feb 23 - NVDA 820c Entry 2.25 (swing from Thursday) - High after $25.00 ($2250 → $25000 potential)
Feb 22 - SPX 4090c Entry $2.50 - High after $9.20 ($2500 → $9200 potential)
Feb 16 - SMCI 1000p Entry $11 - High after $195 ($1100 → $19500 potential)
Feb 15 - TSLA 195c. Entry $1.20 - High after 5.95 ($1200 → $5950 potential)
Feb 14 - NVDA 720p. Entry $4.5 - High after $12 ($4500 → $12000 potential)
Feb 13 - SPX 4955p. Entry $5 - High after $34 ($5000 → $34000 potential)
Feb 12 - ARM 180c. Entry $1.20 - High after $14.10 ($1200 → $14000 potential)
Feb08 - ARM 100c. Entry $5 - High after $27.50. ($5000 → $27500 potential)
Feb07 - TSLA 185c. Entry $2.53 - Hight after $5.60 ($2530 —> $5600 potential)
Feb05 - SPX 4940c. Entry $3 - High after $16.60 ($3000 → $16,600 potential)
Feb02 - AMD 180c. Entry 0.15 - High after $1 ($1500 —> $10000 potential)
Jan 29 - SPX 4910c. Entry $1 - High after $20 ($1000 —> $20000 potential)
Jan 26 - NFLX 570c. Entry $0.50 - High after $9.85 ($500 → $9850 potential)
Jan 25 - TSLA 185p. Entry $1.5 - High after $6.3 ($1500 → $6300 potential)
Jan 24 - SPX 4890p Entry $1.50 - High after $22 ($1500 → $22000 potential)
Jan 24 - SPX 4880p Entry $0.50 - High after $12 ($500 → $6000 potential)
Jan 17 - SPX 4740c Entry $0.20 - High after $2.80 ($200→ $2800 potential)
Jan 17 - SPX 4740c Entry $1.20 - High after $12 ($1200→ $12000 potential)
**Past Performance is not indicative of future results
For live alerts and market commentary click the button below.
Tuesday’ Price Action (Education)
You don't try to make $100,000 ...You don’t start by saying, I’m going to make the biggest most profitable trade and turn $1000 into $100,000 and fix all my bad trades before.
You say, I’m going to plan and execute 1 trade as perfectly as I can today. You do that every single day, and soon you'll have a $100,000 and likely much more!
SPY/SPX
I was looking to get short given market weakness, and took a short on open, but quickly had to cover once the selling exhausted. On gap downs, I absolutely hate chasing shorts down and if I do, I have my finger on the cut the trade button ready.
Given the price action I became less convinced of follow through on downside, but I also wasn’t convinced of how much upside rally we get.
Solution. Credit Selling. If you haven’t added this to your trading toolkit, you should. It’s become one of my favorite techniques and I can take more sizing using it because time works in my favor. We’re playing the other side of the game and want contracts to bleed out.
You ca see the 2 level gap down on open and so when 518 back tested. I loaded up short. Taking some profit into the new lows and then stopping out when the previous low at 516.80 was reclaimed. I don’t want to be a part of chop especially when chasing shorts.
I also made a plan while shorting for how far will SPX drop to and can I take 90% probability win credit sell trade. I identified SPX 5175p/5170p as trade. Starting in at $1 and adding each 0.50 higher. Ideally I wanted it to get to 2.50 to add more. It got to 1.60. This was a beautiful trade following the 2 hour trading philosophy. The work was done during the first hour and we collect our pay checks by end of day when these goto 0!
Next step is to figure out will there be more selling or not. After the first hour it is easly to see how 516.50 turned into support. At that point the only way for me to consider a short would be to see a failed breakout in the afternoon.
We got that on the 518 push at 1pm. So I got short there and covered 50% on vwap per process. At 13:45. We got a failed breakdown on vwap and that invalidated the short. I then tried to get 5200 calls for $1 but they weren’t dipping and so I made a plan to credit sell 5205/5200p. I was very late to putting the order in and filled for 1.50 when I could have got it for $3. My target was 5210+ we got to 5207. Doesn’t matter. As long as we closed over 5205 I win!
Please reread that and review the charts! That is power of credit selling. if you can accurately predict the close AND give yourself some buffer ($5 in my case) you can great a high probability win and extract profit from the market.
MSTR
I missed the long on this, but last 2 days I mentioned how sub 1550 was the long spot on MSTR and in yesterdays blog I mentioned how 1520 was a key area.
To recognize and plan the gap reversal here is what to do. First look for support to be established during first hour. Then look for VAP to be reclaimed, followed by a back test of vwap/a level. Then count 2 levels from that backtest for a target.
Let’s step through it. after first hour 1460 is established as support. 1520 is crossed during first hour. 1520 and vwap are back tested at lunch and 1520 is reclaimed. At 1530, one can get long and use 1510 as a stop. Target should be 1630. If process is correct, we should see 1630 by today. And if reversal is in place, 1700+ by Friday.
Key Lessons
After review the trades above you should learn the following:
Learn how to read the price action at levels. You don’t have to be in a hurry but you do have to take action in planning and execution once a direction is defined.
Use the levels. My levels on SPY / SPX are often uncanny in how accurate they are hit.
Learn about of credit selling
Learn how to plan and target gap down reversals
Trade Ideas - Plan for Wed Apr 3
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.
The 10Y is still over 4.20 so I have a bearish bias, however I will also consider longs off support to take advantage of short squeezes. If you review the daily chart on SPY, almost every 2-3 day red day sequence is met with violent upside moves. Will this time be different? Maybe, but I will go with the “odds” until it stops working 2 or 3 times. I’ll also quickly go short once that sell action becomes clear. I don’t worry about being right on direction overall, I worry about can a plan a level to level trade or not based on the price action I see.
Based on premarket action, anything can happen. Per today’s picture it appears the bears have the upperhand. Will the bulls win?
Today I will be watching: SPY, TSLA, and AAPL