Emini Futures Trading Update- 07Nov2017

Hello Folks, this is an early morning post on Nov 7th.
The S&P500 Emini futures at 2588.50
Today’s Range (so far): 2586.75 – 2593.50

Our Trade#2 has hit its target of 2591 in overnight trading. In fact 2593 was also hit, which was our earlier target, but 2593 is the technical edge of the resistance I am seeing for today, so that was not a bankable target. For today both 2591 and 2592 had nearly equal probability but 2591 would get us out with good profit sooner and that’s why I chose 2591 as the revised target last evening.

So we have achieved our monthly performance target of 20 points with 2 trades.
Trade#1: Long from 2573 to 2585 (+12 points)
Trade#2: Long from 2583 to 2591 (+08 points)

20 points in the current market are like 25-30 points in a market in more regular conditions with normal valuations and without several weeks of upmove behind us.

Here’s the end of day chart for Nov 7, 2017.
spx500-futures-daily-chart-analysis-07nov2017

Futures Analysis and Trading Strategy: The yellow line is the support line for the futures and they have been testing it periodically. Problem will come when this support line breaks and the futures close below it. That will increase selling pressure, and the futures will immediately want to test 2540-2550 again, but there is no major support till 2500, which is 85 points below current level. Therefore, once should avoid long trades below 2570 till things stabilize and the charts show strong buying action at a particular level.

Our analysis is that we will see some volatility this month, so I am glad we have got our 20 points in the bag within a week. If the futures had some correction in recent weeks, we could hold the long positions with a bit more confidence, but the futures have been moving up for 12 weeks now, and they are far away from many support levels on weekly charts. A reversal towards 2560 would be very normal after such an upmove.

Upside of 2600 is visible, and it can come this month, but the risk reward is not looking good, and we will not do a General Trade based on that.

Traders with 5-10+ contracts: Here’s a new optional/tactical trade. “Buy Emini Futures at 2588 for Target 2598 with Stop loss 2578.” This trade can be done with 1-2 contracts if you have 5-10 contracts. The probability of success in this optional trade is 50-50, and there is not recommended for traders with less than 5 contracts.

For the rest of this week, we will observe how the futures handle the band of resistance between 2588 and 2593. It has become a strong resistance over last few days, and the futures many have to go down towards 2570 levels to regain some fresh buying momentum. Thanks.

Leave a Reply

Your email address will not be published. Required fields are marked *