Making Huge Gains After A Halted Market

by | Mar 10, 2020 | Editorial | 0 comments

Right now we are now well off the highs and approaching no-man’s-land when it comes to the markets.

It was so bad all the overnight futures markets were halted due to Market circuit breakers.

And then this trickled down to every US market, causing them to halt at 9:30 on Monday morning.

And that’s not even talking about the all-out war on oil prices which drove the oil markets down in 30% overnight trading!

It’s starting to appear that the music has stopped and now the final nail in the coffin is being hammered into the “world’s greatest bull market.”

Where do we go from here?

Well it is hard to say and I am not here to predict what can happen in this period of chaos and mayhem.  

But instead, I will take each day, one at a time and position myself to take advantage of the fear in the markets.

And that is where my favorite momentum indicators combined with price action analysis really shine!

Here’s what you missed from this week where I took down over 30% returns without even breaking a sweat!

 

 

Want to learn how to get involved for yourself? 

 

Fear Is Profitable

 

I need to first start off and say one thing… 

When the markets are slow and just melt higher like we have seen over the course of 8 years, you start to question a lot about your trading.

You start to doubt your systems and even change them in fear of doing something wrong.

But that’s exactly what you do not want to do!

I tossed and turned, questioning everything that I built my systems on.

Until COVID-19, better known as the Coronavirus rocked the world’s markets.

And in this panic and fear-driven environment, it has become clear to me that fear is profits, and momentum is the only way to trade this irrational behavior.

So let’s take a look at how this works a little closer.

 

Premarket Macro Analysis – Overview

 

It all starts by taking a look at the premarket each day.  

Each and every morning I dig into where I believe the world is taking us at the opening bell.

Click here to watch me break down the overnight trading sessions for tomorrow’s trading day and how that will impact us.

It starts with preparing for the day, and I help guide you through this with a morning video to explain what I am looking at from the world markets.

 

 

That means every morning I send out a recap of my pre-market analysis to start the day and summarize exactly what to expect going into the bell at 9:30am!

To me relating back to when I played sports it’s the briefing in the locker room before the game starts to get everyone prepared and on the same page.  Without this, the team would struggle to perform at the highest level possible.  

And that is what my premarket video is geared to do and I break down everything necessary to get the trading day going.

What I review every morning:

  1. The global outlook overnight
  2. Sectors for the US Markets
  3. Daily chart on SPY with Technical Analysis reviews
  4. Premarket analysis in the US futures markets
  5. Jobs reports and other economic indicators
  6. Intermarket technical analysis using the VIX TRIN and TICK indicators

I know this might seem like a lot to you at first glance but it is one of the most efficient and quickest ways that I can cover all major topics that are impacting the markets each morning.

Once everything here is done I then move to analyzing the premarket trading session with covering all of my momentum indicators.

 

Premarket analysis of my momentum strategy

 

Now that I gathered enough information to make a decision about trading that day I will look at my momentum strategy to see if things are lining up.

Since momentum is the cornerstone of the trading strategy at Daily Deposits I always make sure that I confirm the premarket macro analysis using these momentum indicators as my next step.

Why do I focus solely on momentum for analyzing the markets every morning?

Because momentum is a great strategy that is hard to beat!  It’s easy to follow, simple to trade and can produce some of the greatest returns compared with other strategies… all without breaking a sweat!

So what do I do?

It all starts with my set of custom indicators.

I use a blend of 

  1. Price action and volume analysis
  2. Moving averages to give me the trend direction 
  3. Support and resistance analysis
  4. Stock volatility screener

I first try to piece together what is happening in the markets.  And I do this by using 3 primary timeframes, the 5,10 and 15-minute charts.

Here is what I saw in the premarkets going into the trading session.

 

Source: Thinkorswim

 

Right away I noticed 4 key things that stood out to me.

  1. The short term trend is lower 
  2. The long term trend is lower 
  3. Markets pointing to a lower open with the 10 MA < 20 MA
  4. There is built up volatility at the bottom (in the red dots) that show we are going to experience a sudden move in the stock price
  5. Volume was steadily increasing throughout the morning session going into the open

So before placing any trades in the markets I always turn to these indicators to give me a heads up about what the market is thinking.

And at this point it’s also a good place to start looking for key levels from the overnight trading sessions.  This is where I typically begin searching for hardstops, targets, and other entry or exit levels based on technical patterns that are appearing.

My Daily Deposit members received Support and Resistance prices that I came up with based on the pre-market SPY chart.

Key support and resistance levels to trade around:

  • Resistance: 278.50, 279, 280
  • Support: 276.81, 276.24, 275.67

 

The Trade

 

So now that I have a clear understanding of what the pre-market session is doing along with where I need to monitor my position for exit levels I will start searching for an option to trade.

One of the best approaches I like to use is to make sure I pick an option that has some “bang” to it.

Typically weekly options are one of the best ways to make sure you get that explosion in the options prices.

Here is where I would find the Put contracts in the options chain.

 

Source: Thinkorswim

 

So let’s see how the trade signal looked for the premium members:

 

 

It’s never a great idea to rush trades and rush getting your orders set up.  

And that is why all of my members are alerted to every trade before the markets even open!

Preparation is key in professional sports and high-stress environments to ensure no errors are made.  

And the same applies when you are trading – it should be treated like every other high-pressure situation where a solid preparation for the trading day will ensure you are ready for what comes at you!

So what did the members actually trade?

 

 

This one got a little tricky to trade, but it ended up working nicely for us!

If you were one of the traders that got in on this alert you had the possibility to make a 50% ROI on your trade!

Here’s a view of the option prices throughout the trading day showing when I sent the buy alert and assuming you held until the markets closed.

 

Source: Thinkorswim

 

That’s it!  This simple trade returns a slam dunk trade and took down 50% ROI for the day if you held until the close

 

Wrapping up

 

This is really one of the most reliable trading systems that can change your life as soon as your first trade.  

It blows my mind that a system can be this consistent and reliable with timing these markets based on premarket analysis and momentum indicators.  

And why even bother having complicated options strategies when the only thing you need to do is buy calls and puts when the right setup shows itself in the morning.

So if you’re looking for a simple and consistent way to crush the markets….

What are you waiting for?  Click here to join Daily Deposits and get started today!

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