Uncertainty ahead. SPY gaps down big and recovers. Trade Ideas for Wed Apr 16
Are you planning your trades? Do you know when not to trade?
Yesterday I caught a red day. I did everything right but was still red. There will be days like that. Remember you need to be systematic, and if it works you get paid, if it doesn’t you don’t throw your system away. You accept the loss, you review the trade you identify what could have been done better or different.
Overall I was looking for a range break yesterday, and we finally got one but no follow through. Its also one of the more dangerous trade setups. That’s why I tend to prefer to enter for reversals.
Overnight the flush I was looking for developed and SPY dropped down 529 and then suddenly overnight filled the gap and now faded back toward 533-534.
This leave the whole situation very unhinged. In theory overnight was a “clearing” event, but was there volume? Without that, I struggle to trust the meaning of the move,.
This is what leads me to believe we have a lot of uncertainty ahead. My specialty is momentum, but the way the market is moving right now it’s unclear. We will have to wait for key levels to be tested and volume to confirm.
Overall imho bulls are in trouble, but the clearcut selling isn’t developing either, at least nor during market hours.
Powell speaks at 1:30pm. Let’s see if market reacts to it.
News
U.S.-China Trade War and Trump Tariffs: Ongoing trade tensions, driven by U.S. tariffs and China's retaliatory measures, continue to create market volatility. The U.S. implemented a 10% baseline tariff on April 5, with investigations into semiconductor and drug imports signaling potential further levies. China’s signaled readiness for talks if the U.S. shows respect, but markets remain jittery as tariffs disrupt global supply chains, impacting companies like Nvidia (facing a $5.5 billion charge due to chip export restrictions) and ASML (citing uncertainty for 2025-2026).
Tech Sector Weakness: Tech stocks are under pressure after Nvidia’s warning of a $5.5 billion hit from U.S. export curbs to China, causing a 6% premarket drop in its shares. ASML’s lower-than-expected orders led to a 7% decline, reflecting broader chip sector challenges. Nasdaq 100 futures fell 1.5%, signaling a bearish tech outlook amid trade war fears.
Bank of Japan’s Economic Outlook Downgrade: The Bank of Japan is set to cut growth forecasts at its April 30-May 1 meeting, citing risks from Trump’s tariffs on Japan’s export-driven economy. This adds to global uncertainty, potentially weakening the yen and affecting Asian markets, with the Nikkei down 1.01% and Hang Seng down 1.91%
Corporate Earnings and Guidance: Mixed corporate earnings are influencing markets. Citigroup rose 3% after beating earnings expectations with $1.96 EPS, while Albertsons fell due to a weak 2025 profit outlook. Johnson & Johnson slipped 0.5% despite strong results, reflecting cautious investor sentiment amid tariff uncertainty.
Commodity and Currency Movements: Oil prices slid as markets assessed the U.S.-China trade war’s demand impact, while the U.S. dollar weakened slightly. The 10-year Treasury yield dropped to 4.34%, puzzling analysts amid tariff-driven bond market dysfunction. These shifts reflect broader market recalibrations to trade policy risks
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Trade Recap for Tue Apr 15
GOLD BOLD ITALIC = price action signal
WHITE REGULAR = action to take/taken
GREEN REGULAR = trades I should have taken
SPY / SPX
What a waste of a day and capital. At least that what it feels like. But bottom line this is part of the business. The only thing I could have done differently on the 542 consolidation, and vwap break is to take 5430 bear calls.
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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.
Trade Ideas - Plan for Wed Apr 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
Overnight action is weird imho. Will need to see market reactions. Overall I’d like to get short on pops/resistance tests and fail. Seems like yesterday there was a fair about of put flow.