Case Study: The BEAR TREND wins but with insane volatility we saw multiple chances to catch the MOVE.
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Summary:
On October 19, 2023 we opened with a strong BEAR TREND and a Jerome Powell speech scheduled at 12:00. It was delayed due to some climate protestors. J Pow is the most powerful man in the world and outside events like this typically bring volatility. This was an INSANE session but keeping the BEAR TREND BIAS and expecting THE MOVE to the downside paid handsomely.
OPEN - BEAR TREND
MIDDLE - 2-STRIKE MOVE down and violent move up
FINAL - BEAR TREND wins with SPY closing 4-STRIKES lower.
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 strong signal.
What does the BEAR TREND tell us?
BEAR TREND gives us a framework to use for the rest of the session.
When a BEAR TREND is identified we expect THE MOVE (2-3 strikes) to occur in that direction at some point during the session. Sometimes a TREND can move that way the entire day where the hold period for maximum gain is extended (4-6 hours).
SPY moves from the 431 STRIKE at approximately 10:15 to the 429 STRIKE at 11:22.
This is a 2-STRIKE MOVE and if we are in any put options, we are exiting here down to runners only.
Given we know that Jerome Powell speaks at 12:00 we are completely risk-off only holding onto positions we are okay with going to zero.
The middle session was some of the wildest price action we've ever seen.
The algos got Powell's remarks and reacted with pure violence.
Just look at this candle.
The initial reaction to JPOW speaking is usually the fakeout before the real move.
We keep the BEAR TREND BIAS and we're looking for any and every bear trade to enter.
Price begins moving up towards the HIGH of the session and we get TWO BEAR BOMBS both return 200%+ with no drawdown in only 13 minutes.
12:35 we've captured a 3-STRIKE MOVE when we also get two more BEAR BOMBS. If you're in the trade, it's close to a 200% gain at this time. Depending on your trading strategy you can exit some of the position or continue holding as it's possible we will go lower and 5-STRIKES or more is possible.
However at 12:38 we tap just below the 428 STRIKE and price begins to move up.
As soon as it goes above the 428 STRIKE we want to exit the position down to runners only. That is a 4-STRIKE move.
At this point, you have captured THE MOVE close to 4-STRIKES and over a 200% return in less than 20 minutes of total trade time.
You should take a second, drink a maithai and decide if the rest of the session is worth trading or not.
We're combining the middle and final sessions into one because at this point, you should probably stop trading.
However this part is very important.
There's a massive pump off of the bottom a 4-STRIKE move back towards the previous high of the day.
ONLY WHEN WE GET TO THIS POINT DOES THE BULL FLOW SHOW UP.
Here's why these trades are a BAD IDEA:
1.) It's a BEAR TREND (we expect price action to move down)
2.) A 4-STRIKE MOVE already happened by the time the alerts appear
Traders got crushed by the move up, the move down and are trying to make it all back here in desperation.
Do not be desperate.
Keep the bear bias.
The small fast trade? It worked out pretty well returning 254.59% in one hour ending the day at 134.14%.
That's how you trade a perfect BEAR TREND day!
This was as fun and volatile session as we can remember. Powell speaks and the market listens. You had multiple opportunities to make A LOT of money with SPY closing near the low of the day and making the biggest move down starting in the final session.
BEAR TREND REMINDERS:
✅ Expect a 2-3 STRIKE MOVE in the trend's direction
✅ Anticipate price action to move in the trend's direction the entire session and possibly close at the low
✅ Remember that max gains on TREND days have extended hold periods, sometimes up to the full session length.
We got all three of them on 10/19/23.
TREND STRATEGY: Trading alerts based off of the open session trend puts the user at an advantage. You win when the house (Wall Street) wins. It is not guaranteed... this is trading after all and 0DTE is the most degenerate financial derivate ever created.
