SPY puts in failed breakdown and continues rally! Trade Ideas for Thursday May 16
How being process and systematic can save you and make you money regardless of your bias.
When I wrote the blog yesterday SPY was looking weak and had broken a key support area dropping 2 levels overnight to 483.50 after putting in a red day. Process wise I had to go short and luckily I sold 2/3 of my short into 483.50 and got stopped flat on last 1/3. This all happened overnight.
In yesterday’s comments, I shared that we may have put in a failed breakdown. This has happened before. When we gap down strongly overnight, but recover and reclaim the support break by open. After that we can expect a breakout to the upside and that is what happened.
I made 2 plans, if 486.30 breaks go short and if 487 clears go long. I got chopped on my short but the long played out perfectly. The only issue is that I hesitated on entry and wait for 488 to clear for confirmation.
The reason I’m sharing this story is that it is all process and system driven.
I was short biased! Price action and reaction to levels dictated upside is coming.
I did the right thing with shorting 485 break overnight, and the right thing when accepting the 485 reclaim was a failed breakdown and seeing 487 as upside coming.
My additional clue was the harbinger. NFLX was making new highs.
So I told members I’m getting in long and setting sell orders and then going to sleep.
Great to just trust targets to come and get paid while sleeping! I want each of you to get to that level of confidence. My levels and edge planner are often super precise.
How precise?
EXAMPLES:
SPX 5900c: Edge generated $27.20 target it got to 26.20 from $9!
NFLX 1188 target: reached 1187.80!
Stop being a hobbyist and invest in becoming a focused disciplined trader with a trade to win mindset with us.
Overnight Action
SPY - held supports and is gapping to 492
VIX - rejected 19-20 and now sub 17.5!!
AAPL - gapping back up to 212
NVDA - back to 136
TSLA - gapping up to 447
What an insane market! They are roasting shorts at every opportunity. Given headwinds and no major support backtests this rally/grind is super unexpected. It’s times like this I’m both thankful and sad I’m not a swing trader. the 500 reclaim I was tactically long, but to swing long for multiple months seemed ill-advised. Retail piled in while institutions stayed side lined. Based on overall action we continue to be in BTFD ("Buy the *** dip” mode). While that continues, we use failed breakdown as our default trade and go short at either peak exhaustion or break of support levels.
So I will continue to follow process and make money looking for level to level moves. Our intraday gains are insane!
From yesterday’s alerts:
SPX 5850p 5.20 stops 4.2 — stopped -20%
SPX 5900c 9 reached 26 risk 1.8 — over 100%, but up to 9R!
SPX 5910c 1.5 reached 7
ANNOUNCEMENT: STARTING FRIDAY I will be publishing after market close and will give comments in morning after first hour. Why? I’m changing my schedule so that I can sleep in/work on other things. I usually wake up at 6:30am and shoot to publish aby 8am local tome and then don’t actual make trades until after 10:30 or 11:00am. and 90% of profits are now coming in last 30 minutes. Its inefficient use of time.
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 Thur May 15
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
I was slow to accept the failed breakdown trade other could have entered SPX 5900c for $2.5 for a 10x trade instead of a mear 100% gain trade or 9R on risk.
That said. there are multiple opportunities. You don’t need to nail the support buy (which is my preference when bullish). the range break of 487 and clearance of 488 almost guaranteed 491-492 coming. We are over 492 this morning.
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.
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 Fri May 16
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
We follow process. Given the gap up, I have to watch for failed rally exhaustion and sell program, but we continue to be in a strong BTFD regime.
Waiting for 10:30 to 11:00am continues to be the way to go for clean trend joins.