Emini Futures Trading Update- 28Mar2018

spx500-futures-chart-analysis-28mar2018Hello Folks, the S&P500 Emini futures are at 2610.00
Today’s Range: 2593.00 – 2633.50

The futures are holding above 2600, which is positive for now. Yesterday, they fell below 2600 twice and in between bounced up above 2630 and again fell back to 2600, hitting our absolute stop loss at 2600. The futures went above 2630 briefly, which is the safety zone, but fell back to 2600. The market has been more volatile than I expected because futures have come back to their 200 day SMA after testing it just 2 days back, which is very uncommon, and we got a cascade of stop losses till 2593.

We had a high quality set up at 2650, which hit stop loss at 2630. And unfortunately 2630 was picked up in the bounce from 2600, and that breakout failed. That breakout setup at 2630 came for the first time after 07 March 2018, after nearly 3 weeks, so we trusted it, like many others, but it failed. There is enormous stress in the market currently, and 2600 is the last point of long trade.

So we will not do any further trade till I we get clear confirmation that 2600 has been defended, and that will not happen in the next 2 days. So any trade will be only in April after a few days, and most likely above 2700.

Please note our trading strategy:
We want to be long above 2600, and 2600 is the absolute stop loss for the long trade. And 2600 level testing won’t happen many times. There should be a decisive move in the coming days. The range of 2500-2600 is not tradeable. Below 2500, there will be more selling pressure, and we may consider a sell trade below 2500 with tight stop loss, but that’s not our base case. The long trade is still valid on weekly/monthly timeframes. Upside targets are 2800-2880, so all stop loss amounts will be recovered.

We can expect April-May to be better, but we will be very cautious in our next trade. We will do a few small trades of 10-20 points each to increase our capital, and then aim for larger trades of 30-50 points, because the fall seen in last 2 weeks will mostly probably reverse with similar pace.

In hindsight, March 2018 (second half) has been like Dec 2015, when the Fed gave complex commentary and market spooked, and no trade went right after the Fed commentary, even with very good set up. Its an expensive lesson to be very cautious of the US Fed, esp with new Chairman who wants to establish himself. The large portfolio re-adjustments would be near completion by now.

The market currently is not rewarding any position that is holding for more than 50-60 points, and rapidly reversing any gains. Its the sign of a nervous and fearful market. We may see 2800 level by end May.

I am doing the same trades in my account, and my capital is also down this month. But I have seen these situations a few times, though there is always a twist in each situation. I am confident we will get back into winning mode again. We are with S&P500, not some ordinary stock!

[Bonus Trade]: Buy S&P500 Emini Futures at 2620 for target 2650 with stop loss 2600.

Summary: 2600 is absolute stop loss for long trades, and we will stick to that. There is no new trade for next couple of days at least. We will wait for double confirmation for the next trade, so entry point maybe higher. We will do a few trades for 15-20 points gain, with tight stop loss of 8-10 points to recover capital. We will surely have long position above 2700. Please contact me if you have any questions. Thanks.

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