The March to All-Time Highs on SPY is Almost There

Tom Gentile

Posted in
Newsletter

By: Tom Gentile
May 15th, 2024

5 mins read
Image 11

The Equities markets are on the rise again.

Since Powell last spoke the market bulls seem less afraid to put their money to work as their seems to be renewed expectations of rates cuts happening this year; where some were beginning to think and say a rate cut may not happen until January of 2025.

I’m not one to state my predictions of what the Fed will do. That isn’t a fun game, and I would rather wait for them to say what they’ll do, and I’ll then analyze market reaction, put in my due diligence in spotting repeatable patterns and build acceptable risk trades and manage them the best I can.

Right now, the Dow Jones Industrial Average is up for a 6th straight trading day. This is its longest win streak for the year.

The % gains on the year thus far 2024 for the big three indices are:

  • Dow +3.63%
  • NASDAQ +8.6%
  • S&P 500 +8.76%

Market in Focus: SPY – SPDR S&P 500 ETF Trust

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Sell in May and Go Away is one adage that usually indicates a period of time, (deemed the summer months) the markets aren’t as robust.  This year that may not be copletely true as we are showing seasonal strength from Money Calendar showing a bullish month when ananlyzing our curated list of Money Calendar securities showing a majority of bullish patterns.

The Fib tool on the SPY chart above shows SPY did not need to trail back to the 38.2% fib retrace level to find support.

Another Fib level not shown in my tools is 23.6% and I noticed SPY high minus low of this period of time is a difference of 100.6-points.  Take 23% of that and the number is 23.74. 

Taking 23.75 from the high 523.21 and that makes for a price support possibility at $499.46, which is pretty close to wher it ratraced before turning back up.

Tools and Observations

Seasonality

When I educate folks on a style of options trading based on a seasonal time frame or based on seasonal analysis, I am not talking about a ‘season’ as in Back-to school season or tax season.

I am talking about specific periods of time in a year or with in a year’s period of time.

To me,  seasonality refers to the regular and predictable fluctuations or patterns in the price action of certain securities, stocks or ETF’s that recur on a repetitive, consistent basis.

These patterns are based on historical data and tend to repeat during specific times of the year.

One such seasonal pattern I am a fan of is the Mid-Month Pattern, or as some of my students refer to it, the 9-11 trade.

This is where I’ve recognized a pattern for SPY, where the SPY has a tendency to trade higher over the 9 through 11 trading day each month. NOT the 9th, 10th, and 11th calendar days of the month, but the 9th through 11th ‘trading day’ each month.

The reason I gather this pattern occurs on a frequent basis is each month investment/ hedge funds get their monthly inflows  of capital from their investors and since they have to put there money to work, so long as there isn’t a lot of push back from the bears, the money being put to work in the markets is on the buy side and this pushes the market up a bit.

It is not a pattern that work 100% of the time; there isn’t one out there that does.  It does work often enough for me to still use it when I want, and it is still a pattern I like to educate my students on.

Below is the spread results of the open price from the 9th trade day of each month to the closing price on the 11th trade day of each month for 2023 and thus far in 2024.

9-11 Results 2023 and 2024 SPY

2024


Diff
Open 01-12477.84Close 01-17472.28-5.56
Open 2-13494.53Close 02-15501.967.43
Open 03-13517.11Close 03-15509.67-7.44
Open 04-11515.68Close 04-15504.59-11.09






1/4 W v L25.00%Total Pt Gain16.66Avg / Mo-4.16






2023


Diff
Open 01-13393.62Close 01-18391.59-2.03
Open 02-13408.72Close 02-15414.65.88
Open 03-13381.81Close 03-15389.37.49
Open 04-13409.18Close 04-17413.944.76
Open 05-11411.95Close 05-15 412.940.99
Open 06-13435.32Close 06-15442.557.23
Open 07-03442.92Close 07-06439.66-3.26
Open 08-11443.97Close 08-15442.89-1.08
Open 09-13446.22Close 9-15443.48-2.74
Open 10-12436.95Close 10-16436.04-0.91
Open 11-13439.23Close 11-15449.4610.23
Open 12-13464.49Close 12-15469.334.84




 






7/12 W v L58.30%Total Pt Gain31.4Avg / Mo2.61

One can see the results thus far in 2024 haven’t been positive overall. The results for 2023 show an overall positive win % and the average gain in PY is 2.61 points.

My options trading process for this pattern is to consider buying to open a call option ‘At the Money’ or slightly ‘In the Money’ the beginning of the 9th trade day with the intent to close the option at or near the close of the 11th trade day.

Tom Gentile
C1P: Chief 1-Percenter

App: Toms Option Tools

Toms Option Tools scan the markets for bullish and bearish trade opportunities using our proprietary scans and strategy algorithms. TTR Darknet finds bullish entries based on triple stack channel collisions. Money Calendar identifies seasonal patterns with at least 90% accuracy looking back 10 years. Weekly Cash Clock finds short term opportunities that last a week on average. Microcurrency Trader applies Darknet technology and moving averages to cryptocurrencies. Velocity Trader utilizes volume spike and Velocity indicators on custom stock lists. Quantum Scripts scans the markets for momentum acceleration signals and employs Quantum noise filters. Optimal Trader finds directional pre-earnings opportunities that are optimized for entry date, stock movement, and volatility surge. My Trades tracks the profit/loss of your trades, displays stock charts and risk graphs, creates new trades, and edits existing trades. Morning Report provides top 10 option rankings in 6 categories each day.


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