What Is Counted As A Correct Pressure Prediction?
This is our official statement of correct predictions.
Spytomorrow.com offers free (and paid) next morning SPY (S&P 500) opening pressure predictions. Although there are many approaches to use this information for trading. Our SPY-T methodology is an overnight swing trade. We buy options at the U.S. market close and sell soon after the following U.S. market opens.
Our main measure of a correct prediction is the opening of the SPY compared to the previous day’s close. Our second measure is if the market reverses and moves into the predicted territory soon after the opening. This is common within the first 30 minutes of trading. For our use, we limit the time frame to the first 30 minutes after the U.S. Market opening bell.
The image to the left is an example of an up-pressure prediction starting down with an immediate up in the first minutes of the market opening.
Although we often see our pressure prediction follow through later in the morning, we feel the prediction model isn’t reliable after the first half-hour of trading. In other words, a new reading is required. We only offer end-of-day readings after 4PM to the public. Members have every 1/2 hour pressure reading between 10AM – 3PM EST.
It’s common, especially in low volatility markets for the market open to hover around zero until open. Sometimes they open a little above or a little below zero, but once the market opens the pressure seems to take over. Although our algorithms are based on the ETF SPY, during flat markets, it’s valuable to find higher IV stocks and EFTs.
Sometimes, the pressure reading from the night before do not follow through and is considered wrong. Holding options overnight can be risky. Theta decay and volatility shifts can affect option prices negatively. News is often the biggest catalyst. The fact is we have world markets making moves overnight. Also, before the US market opens the next morning, usually around 8:30 am, the economic news is released. Such information can affect the opening or change the U.S. market mood, including the SPY.
Our goal is to make money. If our pressure prediction places you (and us) in the position to cash in (about 65-80% of the time) during the first minutes of the trading day. We all win no matter where the market goes after.
The first and last hours of the trading day are the most volatile. There are lots of opportunities to win or lose money. However, once the day gets going, without new measurements, we have no idea where the market will head. Currently, we don’t have day trading measurements available to the public (1/2 hour readings for members). So we recommend, when using our trading methodology to sell near open.
There are times you can walk up profits or walk down losses (maximize gains and minimize losses) if the market is moving in your favor, however, this strategy is for the more skillful trader.
If you can make an average of 1-5% profit on your entire account most days. You’re going to be a very happy camper at the end of one year. Much more can be made, however, smaller position sizes in a dedicated risky trades account or allocation is recommended for the safety of your hard-earned money.