Fed rate hike fears spark tech bloodbath — contrarian bounce play on the S&P 500
Created
Thesis
When everyone rushes to sell at the same time on fears of rate hikes, markets often snap back once the panic subsides. Options traders are already betting that the market overreacted to the Fed news and that rates won't actually go up as much as feared. If they're right, beaten-down stock prices should bounce back as the panic fades. This sets up a classic 'buy the dip' opportunity where you ride the market's natural recovery.
Strategy approach
Build a mean-reversion strategy on SPY using the 1-hour timeframe. Entry: Long when the 14-period RSI drops below 30 (oversold) and the price is more than 2 standard deviations below the 20-period VWAP. Exit: Take profit when the price crosses back above the 20-period VWAP, or hold for a maximum of 5 trading days. Stop loss at 2% below the entry price.
Markets and timeframes
Entry and exit at a glance
These are the named rules in the shared configuration. Review the full conditions below before using a strategy.
- Entry: Oversold RSI/VWAP Long (SPY@1h) (2 conditions)
- Exit: TP: Position Exit Rule (SPY@1h) (1 condition)
- Exit: Stop Loss at 2.0% (1 condition)
Shared strategy rules
Rule configuration
{
"data_dependencies": [
{
"symbol": "SPY",
"timeframe": "1h"
}
],
"entry_rules": [
{
"conditions": [
{
"left": {
"chart_ref": {
"symbol": "SPY",
"timeframe": "1h"
},
"indicator": {
"name": "rsi",
"period": 14
},
"type": "indicator"
},
"operator": "less_than",
"right": {
"type": "constant",
"value": 30
}
},
{
"left": {
"field": "close",
"type": "price"
},
"operator": "less_than",
"right": {
"chart_ref": {
"symbol": "SPY",
"timeframe": "1h"
},
"indicator": {
"name": "vwap"
},
"type": "indicator"
}
}
],
"direction": "long",
"enabled": true,
"id": "entry_1_spy",
"name": "Oversold RSI/VWAP Long (SPY@1h)",
"priority": 1,
"trade_symbol": "SPY"
}
],
"exit_rules": [
{
"applies_to": "both",
"conditions": [
{
"left": {
"field": "close",
"type": "price"
},
"operator": "greater_than",
"right": {
"chart_ref": {
"symbol": "SPY",
"timeframe": "1h"
},
"indicator": {
"name": "vwap"
},
"type": "indicator"
}
}
],
"enabled": true,
"id": "exit_1_spy",
"name": "TP: Position Exit Rule (SPY@1h)",
"priority": 1,
"purpose": "take_profit",
"target_symbol": "SPY"
},
{
"applies_to": "both",
"conditions": [
{
"left": {
"field": "unrealized_pnl_percent",
"type": "position"
},
"operator": "less_than_or_equal",
"right": {
"type": "constant",
"value": -2
}
}
],
"enabled": true,
"id": "exit_2_spy",
"name": "Stop Loss at 2.0%",
"priority": 100,
"purpose": "stop_loss",
"target_symbol": "SPY"
}
],
"position_sizing": {
"max_position_percent": 25,
"method": {
"risk_percent": 2.7446,
"stop_loss_percent": 2,
"type": "fixed_risk"
},
"min_position_value": 100
},
"trigger_timeframe": "1h",
"version": 1
}Indicator configuration
{
"indicators": [
{
"name": "rsi",
"period": 14
},
{
"name": "vwap"
}
]
}Parsed strategy
{
"data_dependencies": [
{
"symbol": "SPY",
"timeframe": "1h"
}
],
"entry_rules": [
{
"conditions": [
{
"left": {
"chart_ref": {
"symbol": "SPY",
"timeframe": "1h"
},
"indicator": {
"name": "rsi",
"period": 14
},
"type": "indicator"
},
"operator": "less_than",
"right": {
"type": "constant",
"value": 30
}
},
{
"left": {
"field": "close",
"type": "price"
},
"operator": "less_than",
"right": {
"chart_ref": {
"symbol": "SPY",
"timeframe": "1h"
},
"indicator": {
"name": "vwap"
},
"type": "indicator"
}
}
],
"direction": "long",
"enabled": true,
"id": "entry_1_spy",
"name": "Oversold RSI/VWAP Long (SPY@1h)",
"priority": 1,
"trade_symbol": "SPY"
}
],
"exit_rules": [
{
"applies_to": "both",
"conditions": [
{
"left": {
"field": "close",
"type": "price"
},
"operator": "greater_than",
"right": {
"chart_ref": {
"symbol": "SPY",
"timeframe": "1h"
},
"indicator": {
"name": "vwap"
},
"type": "indicator"
}
}
],
"enabled": true,
"id": "exit_1_spy",
"name": "TP: Position Exit Rule (SPY@1h)",
"priority": 1,
"purpose": "take_profit",
"target_symbol": "SPY"
},
{
"applies_to": "both",
"conditions": [
{
"left": {
"field": "unrealized_pnl_percent",
"type": "position"
},
"operator": "less_than_or_equal",
"right": {
"type": "constant",
"value": -2
}
}
],
"enabled": true,
"id": "exit_2_spy",
"name": "Stop Loss at 2.0%",
"priority": 100,
"purpose": "stop_loss",
"target_symbol": "SPY"
}
],
"position_sizing": {
"max_position_percent": 25,
"method": {
"risk_percent": 2.7446,
"stop_loss_percent": 2,
"type": "fixed_risk"
},
"min_position_value": 100
},
"trigger_timeframe": "1h",
"version": 1
}Strategy instructions
Trading agent generated from recommendation idea 'Fed rate hike fears spark tech bloodbath — contrarian bounce play on the S&P 500'. Thesis: When everyone rushes to sell at the same time on fears of rate hikes, markets often snap back once the panic subsides. Options traders are already betting that the market overreacted to the Fed news and that rates won't actually go up as much as feared. If they're right, beaten-down stock prices should bounce back as the panic fades. This sets up a classic 'buy the dip' opportunity where you ride the market's natural recovery.
Performance
No trade count, win rate, or realized P&L figures are provided in this public preview. The thesis and shared rules do not establish a performance record.
What this public preview can establish
- The thesis and strategy approach describe a market view. They do not show whether an entry or exit condition is currently met.
- Technical strategy fields are shared above. Inspect the actual conditions and check when they were evaluated before relying on them.
- No trade count, win rate, or P&L figure is published in this preview. It cannot establish a performance record.
Explore
How CommonQuant researches and tests strategies · Public paper-trading record and its limits · Discover public strategies