Will SPY keep its overnight gap up? Trade Ideas for Thursday May 29
Also: How to secure profits on option trades overnight
The market gapped up to a new “recent” high overnight but has since retraced over 50% of it. Will SPY continue the rally trigger by the tariff block from Federal courts?
I’ll talk about my thoughts on this in the ideas section…
Predicting a gap up…
Yesterday in THT PRO chat I said if we flush into the close, I expect a gap up on Thursday. Why? Partly intuition, partly pattern recognition. I’ve seen it so many times where we consolidate all day on Wednesday just under vwap, get a faker flush into close and a massive rip. On Thursday to continue the rally that started on Monday/Tuesday.
I however screwed up the opportunity because of one mistake! I didn’t update my levels in TOS and so I misread that a key level broke.
Yesterday’s key support level for SPY was 587, but I mentally had it at 588. So with the break of 588, I cancelled my long order plans. Very expensive mistake!
Update your TOS or TradingView levels every day, every time. If you are wondering what I am referring to… THT PRO members have access to code that renders my levels on charts. That code is generated and updated every morning for about 8-12 stocks and indexes.
Let’s get into yesterday’s action..
SPY / SPX
Wednesday…
In yesterday’s blog I wrote I was watching 592 closely… I took a long near open anticipating a breakout of 592, but was keenly aware of the possibility of a failed breakout reversal being my back up plan.
We got short on VWAP break. SPX 5900p for $4→$8 for 100% gainer.
After that SPY stayed in a very tight range and the contracts weren’t moving. I warned members to for last hour and avoid overtrading this action. Around 11:30 I alerted I liked SPX 5900/5895 bull puts. They were $2 and dropped to 0.35 letting me lock most in before the crazy dump rip and dump again came.
The afternoon headline triggered some wild moves in SPY that I didn’t trade/ plan for as well as I could have.
Wednesday After Close…
With NVDA earnings out of the way SPY rallied from 587.50 to 590. Then with the court ruling SPY squeezed to 598 clearing the previous high of 596!
By morning, SPY has faded back to that super important 592 level!
Thoughts from Wednesday’s price action:
Market’s BTFD regime is back
There was heaving consolidation on Wednesday that I read to mean as basing and expected a faker dip to capture liquidity and then rally on Thursday
The pullback from 598 to 592 is interesting. It’s over 50%. At times this can lead to a full reversal, and other times it’s a back test before continuing.
I spent the first two hours getting positioned long and then the last 30 minutes looking for the Spectre special trade! 2.5 hours of trading. Need to get it to under an hour! and 7 months left to get it done to meet my 2025 goals.
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 Thu May 29
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
The key level to watch is this backtest of 592 on SPY. It was rejected yesterday, reclaimed overnight, and now acting as support ahead of the open
Here is my plan for today…