🐻SPY - Bear Trend - Late Move - 482.05% Gain - 9/20/23

Case Study: On Jerome Powell and FOMC day the RIGD 0DTE options system identifies an early trend with SPY put options returning up to 482.05% on 9/20/2023.

Summary:

On September 20, 2023 we had FOMC and a Jerome Powell speech scheduled at 14:00. These are known market events of significant importance. Anytime Jerome Powell opens his mouth, the market moves. When events like this are scheduled, we notify users through the warning modal.

OPEN - BEAR TREND Medium Signal identified

MIDDLE - BEAR TREND was PENDING

END - BEAR TREND was CONFIRMED. Alerts returned up to 482.05% with no drawdown.

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Open Period:

The RIGD system works by scoring every option trade in the first hour (930 - 1030).

It detected 5 BEAR BOMBs to 1 BULL BOMB.

This triggers the algo to alert users to a BEAR TREND with medium signal for the trading day.

What does the BEAR TREND tell us?

BEAR TREND carries strong probability that a move to the downside will happen.

When a TREND is identified the hold period for maximum gain is typically the entire session length.

What alerts should I look for on BEAR TREND days?

Look to trade:

• BEAR SWINGS

• BEAR LOTTOS

• BEAR BOMBS (+500 score is best)

Avoid trading:

• BULL BOMBS

Proceed with caution:

• BULL SWINGS

• BULL LOTTOS

It can be profitable to trade against the trend, but typically the maximum gain is limited (sub 100%) and hold time is very short.

If you enter trades on the opposite side practice tight risk management.

Under all scenarios LOTTOS should always be considered a 100% loss the moment entered given their extreme volatility.

These trades were initially profitable, but the bear trend did not hold during the middle session.

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Middle Period:

This was unique as it was the first middle session where we saw five LOTTO alerts (OTM options) triggered.

These were the only alerts fired during the middle.

In this scenario the BEAR TREND is not confirmed.

However is it not rejected.

When we view the chart the important thing to view are the blue lines (opening price) and red lines (strike prices).

What you'll notice is at the end of the middle session (13:30) we are near the blue line, the opening price for the day on SPY. There are no red lines. Five hours have passed and price has gone nowhere.

How we interpret the middle:

Four LOTTOS fire towards the end of the middle session. If we were going to see a rally to the upside, it's likely we would have seen them grouped with BULL BOMBS and GREEN FLORBS.

Given the BEAR TREND, it's likely these are cheap hedges in the event price does not go down.

The move has not happened yet as the market is waiting for FOMC at 14:00.

We go into the event keeping the BEAR TREND bias and are looking to enter any BEAR alerts that fire off.

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FINAL PERIOD:

There is a BEAR BOMB sent right before the FOMC statement is released at 14:00.

Immediately there's a massive move down.

However after the move a BULL SWING alert is fired.

Remember on a BEAR TREND day we prefer to trade in that direction but will consider BULL SWINGS for a short holding period.

These worked perfectly.

14:01 - 327 BULL SWING

The BULL SWING is a perfect tag of the bottom candle and returns 70.92% in 32 minutes.

With BULL SWINGS on a BEAR TREND day, we do not want to be in the trade for very long.

Additionally we know Jerome Powell is speaking at 14:30.

14:33 - 303 BEAR BOMB perfect tag

The press conference begins and a BEAR BOMB fires off.

At this point it is the second BEAR ALERT sent after the open. It matches the trend.

We know that taking the trade after SPY hulked up feels bad.

Emotionally it feels like the wrong thing to do.

But that's markets 101.

The lizard people know this and exploit it every chance they get.

This ends up being the best trade of the day returning 482.05% with no drawdown.

It does not get better than that.

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Session Recap:

OPEN - BEAR TREND medium strength identified

MIDDLE - Choppy price action, no significant opposite (bullish) alerts. BEAR TREND is PENDING.

FINAL - event at 14:00 and price drops before a short rally and then nuke until the end of the session. BEAR TREND is confirmed.

Once again the open trend was the winning side and maximum gain occurred only by holding until the end of the session.

The choppy middle did not give a clear direction because of the event beginning at 14:00.

If you followed the BEAR ALERTS from the open and held until the end of the session these were the returns.

However they experienced a significant drawdown along the way.

Beta members can view the full day by clicking here.

Further considerations:

This was a difficult day to trade because the MIDDLE did not confirm the trend. Often when an OPEN TREND is identified the move will continue throughout the entire session.

The optimal method of trading SPY on 9/20/23 was either taking profit on the early alerts and leaving runners (a few contracts) on until the end of the day or waiting for the BEAR alerts that happened in the ending session.

Viewing LOTTOS as a hedge against your positions may slightly limit profits, but could also reduce losses in the event the trend does not hit.

TREND days continue to have extended holding periods for maximum gain.

Future Development: RIGD is building a priority feed that will only notify you for high probability alerts that match the trend.

This will make TRENDS easier to follow without the need to stay up to date on what's happening in the markets or the application.