Will month end flow carry SPY higher or lower today?? Trade Ideas for Fri May 30
Also: How to secure profits on option trades overnight
Yesterday SPY gave up the entire gap up. It then went right back into consolidation mode between 588 and 590.
I’ll talk about my thoughts on this in the ideas section…
Let’s get into yesterday’s action..
SPY / SPX
In yesterday’s blog I wrote I was watching 592 closely… What I didn’t do properly was say that on 592 break target 587. It was kind of implied byt I should have been more clear about it.
By the time the open came, every test of vwap had rejected and the open was no different.
SPY broke 592 and eventually flushed into 587.
Our focus yesterday was on SPX 5880p. And every pop into vwap provided an entry.
I provided the above as my sell targets.
Not bad sell targeting. Round 1 we got $10. Round 2 we got 15 and 20 from $3!
Thoughts from Thursday’s price action:
Market is back into basing/consolidation mode before next move.
It’s unclear which direction we go. 592 rejections imply a 587 break will bring downside, however.
The strong failed breakdown at 587 yesterday implies that 592 will eventually be cleared again.
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
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.
Securing Profits on Options overnight
Sometimes you get this massive paper gains overnight on options but you can’t secure it right? Well if you have a big enough account and a margin account if you have calls you can. What you need to do is buy or sell the stock overnight. and the option turns into a hedge against that position essentially securing your profits.
I’m out of time, but I’ll make a video on this later.
Trade Ideas - Plan for Fri May 30
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
Given the action yesterday, I will wait for 10:30-11:30 before opening positions. I will then look for a trade in last 15 minutes.
I don’t have a strong read on how things play out today given lack of volume or overnight range. Here is my plan for today…
As I was writing this, a headline came out that Trump said China is violating agreement. This risks raising fears about what next.