10/12/22
Grade: B
Goals: Be more selective and raise winning %
Reminders/Aphorisms:
- Don't fight the trend;
- Be patient, take good set-ups
- Respect at least 2:1 R/R
Overview: Yesterday showed some indecision in the SPY/QQQ. Initially we sold off hard to the a new zone formed at 356-357 and then took a strong bounce and went all the way back up to the 362-363 zone we spoke about yesterday. At that zone the SPY then rejected and we had a vicious sell off back to the intraday low of 355.71 and the new 356-357 zone we created and recovered to end the day. In the post/pre market we had been moving up until the PPI numbers came out worse than expected with inflation still rising. CPI numbers are more important and come out tomorrow. As a result, at 8:30 we had a 3 point move back down to previous day close. We are opening at the 358 zone created 2 days ago. I believe it's likely we get a see-saw day where we go up and down all day. Likely scenarios:
1) SPY/QQQ start the day off with a little capitulation and then continue the sell off to the 356-357 zone at which time we likely bounce back up to the 362-363 level. There is a possibility that we continue straight down due to bad numbers, but with CPI coming out tomorrow I'm not sure we get that big of a move today.
2) We recover the drop from the PPI numbers and head to the 362-363 level where we will likely reject again and move back down to lows and the 356-357 levels.
Trade Analysis:
- Trade 1 was a trend continuation long trade. We had a strong move up through VWAP and above all the EMAs. This was the first pullback to VWAP. I got in a little early and had to close on a spike down. I at least respected my R/R.
- Trade 2 was a trend continuation long trade again, same as the prior one. I repositioned myself long on this trade again and got my 50c target. I took the remaining shares on the first red candle but if I had held I could have gotten another 50c. I need to work out a better way of taking the remaining shares.
- Trade 3 was a trend reversal short trade. The 5 minute trend line broke and then pulled up to the VWAP where I got in for a short for continuation to the downside and a 2nd leg down. This was a little riskier than normal but I got a good entry and it never tested my risk (25c). I held for my target 50c, and then took the remaining shares on a green pop off of previous day close.
- NOTES: Gray Arrow 1 was a trend reversal long trade that I was considering. We had a strong sell off at open but found high volume and rejection in the 356-357 zone. I had considered taking the long but did not pull the trigger fast enough and the trade went pretty easily $2 up. This was a missed opportunity for not trusting the demand zone from yesterday, however this was also a riskier trade in the first 10 minutes of the day. Today was overall a tough day to trade as we were ranging. I'm happy that I was disciplined as was able to capitalize at least on smaller moves.
Lesson moving forward: Be wary on big news days for ranging days.