Micro Timeframe: Uptrend
Intraday: Downtrend (first 2 hours) uptrend (remainder of the day)
Sectors:
Depth:
Trades:
1st and 2nd: Micro Continuation Intraday Reversal
TRADE IDEAS: A+
- Today was somewhat of a unique day. Firstly, reversal are extremely difficult to trade and today was a great example of a clean reversal where the intraday timeframe caught up with the micro timeframe and we started to move back in line with it. Why was I so eager to go for this reversal here after not much really setup? The sectors and QQQ were telling a much different story than the price action on SPY.
1. At the open we had defensives selloff combined with offensive selloff. This is usually bad news for SPY. The only problem is that the TICK was purely 100% balanced. We made only +/-500 moves and were perfectly centered around zero. This was the first tip off that perhaps the selling is not going to be strong.
2. The VOLD was only at -1 to -1.5 and was not decreasing steadily which was another signal that sellers are not really in control right now.
3. This is the most important tip off that today would reverse. The QQQ was the entire reason this selloff occurred over the past 3 days. When tech sells off and defensives stay flat or slightly green on the week, this is a big sign that once QQQ stops selling off the SPY will also stop selling off. The QQQ found a bottom somewhat quickly into the session and the moment it made a low on the day and flipped into a big green buying candle I was ready to take stabs on the SPY.
4. This is extremely fascinating. The QQQ fake its bottom at 9:56 and the SPY faked its bottom at the same exact time. Where were the offensive sectors at this moment? THEY ALREADY DID THE BOTTOM SPIKE. XLY and XLC did their bottom fakeout at 9:55 and XLK (biggest factor in risk on sectors) made its bottom at 9:50. This bottom at 9:50 coupled with the bottoms at 9:55 on discretionary and communication was the biggest tell of the day. They pretty much gave you the entry on the bounce off the lows about 5 minutes before the SPY was ever going to do it. This is why the sectors are so important to watch. They tell the story FIRST and the SPY tells the story SECOND.
5. AI has been selling off masively the past 3 days and it was also ripping at the open with zero signs of sellers. Another big tell that sentiment is shifting today.
6. As the offensives started to move higher all the defensives also caught somewhat of a bid which helped us really continue.
For all these reasons, going for the reversal is a great plan. The only problem with my trades is: WHY DID I SELL THEM????
EXECUTION: C
- I got about 10 points off the lows on these 2 trades combined but I somewhat got lucky today. The first trade was meant to only be a scalp because I will never trust the first bounce off the lows, Id rather just wait for the confirmation and get a pullback. I am not mad about that trade other than the fact that tradestation lagged like crazy and I accidentally went short after selling my long. The 2nd trade though was somewhat messy. First of all, I got in pretty much exactly where I said I wanted to get in. at 4105 there was premarket low and I knew we would fakeout that level at least once before attempting to move higher. I got in and after holding for about 5 minutes there was a big spike that didnt quite hit a new lower low but I panicked and tried to sell my long position but instead of selling I accidentally added to it. After I realized that I sold 1 of the contracts and then held the 2nd one. Luckily my average was pretty much at the dead bottom because I panic added to the trade. This is not good but the part I like a lot is that I held the trade after that whole situation and still made about 9ish points on it. There is 1 fundamental problem with this trade though. WHY DID I SELL IT. This trade was nowhere even close to hitting my average price and I sold from an arbitrary number standpoint instead of the technicals on the chart. In my defense I think that selling here in general is a good idea most of the time because going for reversals you want to take the reversal then you can trade the continuation after. Its really hard to trade a reversal and then hold it the whole way for the big continuation unless you can scale out of the position and I only had 1 contract so I cant do that.
- This was essentially the trade I took that got me 10 points but the problem is that this thing went 20 points higher from my exit price. In theory this sell is still super nice because in general reversals fail and if this did fail and I sold it at the top right before the next lower high, then I wouldve felt like a genius. Since it didnt do that and it rocketed 20 points higher I feel like a dipshit.
- If I wanted to take the next trade I shouldve gotten long on this little pullback. The only thing that sucks about this pullback is that it just looks like a rounded top and its going to fail much lower. The small indication that that would not happen is the fac tthat those little green wicks hit a new HOD. That is quite significant because higher highs means higher lows and you HAVE to trust that if you are a daytrader. I couldve gotten long again and sold before the next lower high on the micro timeframe which was the premarket high. Had I taken that trade it wouldve been another 11 points ontop of my first trades. That is probably the best way to do it. Next time I catch a reversal I will get the first move then I will get back in for the continuation of the reversal.
MINDSET: A
- My mindset was quite good for the day. I was eager and ready to watch the sectors for the opportunities. I took my trades aggressively when I needed to be aggressive and I was patient when I needed to be patient. I didnt panic sell my other half of my position after accidentally adding to it and ended up making that trade a big winner. Overall just a nice day where I took my smallll piece and I got the fuck out.
