Will late Feb seasonality fumble SPY's rally? Plan for Monday Feb 26
Good morning traders.
Thursday and Friday were solid trading days, but I definitely underperformed on Friday. No surprise there given my exhaustion. Make sure you rest your body and mind, get fresh air, and treat your body well.
SPY’s dipping buy has been relentless. Friday’s action gave a rally to new highs and consolidation and basing all day after.
I like many others are left wondering, what happened to seasonality? How is that we are making new highs into late Feb. Seasonality refers to how markets have repeating/predictable “seasons” for buying and selling. Typically late Feb to early March is a season of selling.
In today’s blog I’ll cover Friday’s price action, how I plan to trade considering seasonality and a stock I’m hawking that is on the verge of breaking out/squeezing shorts.
Introduction (for New Readers)
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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.
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
Friday’s 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
After the dip and rip from Wednesday, I was was targeting 510.50 for the short. Unfortunately we only got to 510.13.
How do you know when to go short?
One of my 2 primary trade setups are gap reversals. In this case, we had a gap up from 507.50. Then every push over 510 was met with sell during first hour. You can see a top being put in.
By waiting an hour, almost 90 minutes to let the price action show itself, allowed the 5090p to be picked up for $4 and hitting $14.80 into the flush out. for me $12 exit was good enough! Why $12? That was SPY hitting 507.50p. I’m being systematic. I’m not guessing where/when to sell!
NVDA
What an overnight trade. My biggest regret is sizing down. But I didn’t have a choice.
I have a rule. Never hold more than 5% of portfolio in a directional short term overnight option trade. I had to size down my position on Thursday.
I had anticipated that NVDA would hit 820+ on Friday and so buying 800c around 775 for $2.25-3 was a good risk/reward. (I couldn’t get $2 filled)
It kept hitting 4 but not giving me 5 so I could sell 50% and make the overnight risk free. I ended up sizing down per my rules.
NVDA gapped up big and in first 15 minutes crossed the 818 level. What do I do? I immediately sell at $20+
Why? its almost 10x and one of my key profit taking rules. Any gap up push in first 15 minutes, I must begin selling. 80% of the time, I can rebuy at a better price later in the day.
No surprise on this action on NVDA. big run and rally. And profit taking on 820 came in.
Once see from Edge’s scanner that over $2m in put buying came in. I believe the 820c was either premium selling or someone taking profits from a Thursday yolo.
The key is to recognize the action and cross check it with my levels and ask yourself why are they doing that there?
This action let me plan taking 800p shooting for the gap fill at 785. $2.50 to $15+ is a great risk reward isn’t it?
And we got exactly that. I tried for a long at the r/g line, but got stopped as it flushed toward 775. Then went long again on the 785 reclaim with contracts going from $2 to $8.
Solid day! And I was done by 12pm! I was under the weather, exhausted but let muscle memory guide me.
at 1pm I took a quick look at the market and told members I thought consolidation rest of the day and went to bed.
I kept sizing smaller this day because I was exhausted and prone to mistakes. Was still able to net 8% account growth after mistakes/bad trades.
Summary Review of Market Price Action
The market on Friday more or less moved as expected. The one thing I am concerned about is that the volume as we are pushing seems light. If we see volume pick up, into a resistance, I will have to start hawking for shorts/seasonality selling.
Educational Lessons
From the price action review you should have learned the following:
Wait for the levels to plan trades
Take profit on contracts in first 15 minutes
Gap Up reversal trade planning can lead to massive returns
Trade smaller when tired or skip trading
If wrong on first attempt, try again.
Trade Ideas - Plan for Monday Feb 26
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.
Last week was a major rally. I’m looking for today to be choppy consolidation ahead of next leg with possible profit taking coming ahead of PCE data later in the week
The primary stocks I’m watching: SPY, NVDA, ARM
Read on for my thoughts/plan for today.