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Wednesday, August 20th
“If you ask me, something sinister lurks in men who avoid wine, games, the company of lovely women, and dinnertime conversation. Such people are either gravely ill or secretly detest everyone around them.”
– Mikhail Bulgakov
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Markets Today
🌏 Asia-Pacific: Up
🇪🇺 Europe: Mixed
🇺🇸 United States: Down
🛢️ Oil: Up
⚡Crypto: Down
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Trading “linked assets” in opposite directions
could let you target returns in any direction!
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Major Market Events
- Target stumbles — Shares slide after profit outlook slashed; new CEO named
- Fed minutes caution — Notes reveal some officials are still uneasy about inflation risks, tempering hopes for aggressive rate cuts
- Markets fall back from highs as AI stars dim — to some, Palantir, Nvidia and other standouts aren’t looking as strong as they used to
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🤔 My Thoughts
When SPX Loses a Shelf, I Stop Guessing (volume shelf method)
My simple plan to “rent” the move and get paid
Most days, I don’t need a hot take. I need a map.
Yesterday on Profit Panel, I showed how I trade using Anchored Volume Profile (AVP) to trade SPX.
In plain English, AVP shows where most shares have traded. I call the fat zones “shelves” and the thin zones “valleys.”
Shelves often act like support. If price falls off a shelf, it can slide quickly through a valley down to wherever the next shelf is.
That’s the setup I called out on yesterday’s show. SPX broke a shelf. The next shelf sits lower, near 6,400. I don’t predict every tick between here and there. I just “rent” the move with tight risk.
Here’s my plan, step by step:
1) Mark the shelves. On SPX (or SPY), anchor the volume profile to the recent swing that started the rally. You’ll see the big shelf we just lost and the next one down.
2) Don’t fight it. While we’re below the broken shelf, I’m not buying dips just because they look cute. If we push into resistance and stall, I take quick shorts or run a tiny income trade.
3) My simple, defined risk income trade. I like a bear call spread above price when a shelf breaks. Example idea: sell a call near 30 delta, buy a higher call, same expiration about 7 to 14 days out. It brings in a credit and my risk is capped. If price rips back above my sold strike, I’m out. No drama.
4) Flip at the next shelf. If SPX tags the lower shelf near 6,400 and holds, I switch gears. I look for a bull put spread under price (same 20–35 delta on the sold put, same short expiry). That pays me to bet the shelf holds.
5) Keep it tiny. One spread. That’s it. If I get about 50% of the max profit fast, I close it. If price blows through my line, I cut it. I can always re-enter later.
Why this works for me
It keeps me out of chop. It pays me when the tape drifts. And it lets me change sides fast if the shelf breaks or holds. I’m not trying to be a hero. I just want base hits I can repeat.
Risks
News can pop out of nowhere. Spreads can widen. Shelves can fail. That’s why I size small, use time stops, and let the chart tell me when the idea is dead.
We’re back at it this morning with more actionable trading advice and little-discussed market insights:
Click here to watch the on-demand replay!
And don’t forget to register your spot here to join us next time we go live!
To Better Trading,
Alex Reid
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