Emini Futures Trading Analysis- 12Aug2017

Hello Folks, the S&P500 Emini futures closed at 2440.50
Last week was outright bearish for the S&P500 index, for whatever reasons. We all know the market has been moving up without major correction, and it was going to come sooner or later. I was up till 2 am last night and back up again early today morning to do my market study. The market is making me uneasy after a long time. We have been long with confidence since Jan-Feb 2016, and whatever stop-loss we had along the way, was due to market whipsaws, but not due to trend change. The upside targets were always intact. However, now that seems to be changing. My upside target of 2500 was almost achieved by the S&P500 index, which made a high of 2490 (just 10 points less than 2500). The futures went till 2488, and reversed, which was a bearish sign. But the next day gave a bullish reversal, which offered support to market, and then we got a 40 point cut from 2470 to 2430 the next day, which has wiped out most of the recent long positions.

Please see this daily chart of S&P500 Index ETF (SPY)
spy-etf-chart-11aug2017

The S&P500 index is literally sitting on support line at 2440. The index has used this support line a few times in recent months to bounce back and resume the uptrend. Every time the index tests the support line, the index will gain some strength, but the support line becomes weaker. One of these times, the support line will give away, and we may get 80-100 point fall within a week. It is this possibility of a sharp fall below 2440 that is making me rethink our trading strategy for August. We wanted to be cautious in August from the start, and the setup is looking weak.

We will have to start a short trade at some point, and I am thinking what that point would be. The market won’t give second chances in a correction, as we saw this week. The short trades tend to be 3-4X faster than long trades, and therefore, its very difficult to catch them midway unless we are already in the trade.

One way to handle such a situation is to buy and hold SPY put options. We have done this in the past, and in case of any large market fall, the Put options work like short futures, at a fraction of the cost of futures.

My recommendation is to hold this put option: SPY Sep 2017 240 Put
https://finance.yahoo.com/quote/SPY170915P00240000

Expiry Date: Sep 15, 2017. Last traded price was $2.60
Contract size is 100. So each Put option contract will cost $260. Traders can hold a few contracts. This will offer good protection/hedge in this market till its expiry, which is one month away, and much of the current volatility would play out by then. If the futures have to go fall by 100 points to 2350, they may do it in the next 4 weeks.

Please note: the above put option is a just a suggestion, and the setup looks suitable to hold some put options. You may consider it a Bonus Trade.

With S&P500 Emini Futures, we will aim to close our long trade between 2450-2460 on Monday/Tuesday, and we will look for a short trade below 2440. The futures have to move above 2475 for the current bearish pattern to end. That’s why I was thinking of staying long with target of 2473, but it looks less likely now, compared to a retest of 2410-2420 level. I will mail you separately for this because my analysis is not complete yet. It is complex when the futures have dropped quickly to a support line, and probability of further correction is high. Please wait for my next mail with specific next steps. Thanks.

Emini Futures Trading Update- 15Feb2017

spx500-emini-futures-daily-chart-2350-15feb2017

The Emini S&P500 Futures are at 2350.
Strong upmove continues with no sign of profit taking.
Looks like there are more points on upside before any selling can come.

Traders with 5-10 contracts: If the optional/tactical Sell trade given for you
earlier today hits its stop loss at 2352, then you can do a new long trade
from there as follows, with 1-2 contracts. This is an optional/tactical trade.
“Buy Emini Futures at 2352 for Target 2361 with Stop loss 2342.”

Traders with 1-2 contracts: Please wait for suitable trade set up. We
have 26 points in the bag this month, and we can aim for another good
trade of 10-12 points if we get a reliable set up. Current market rally
looks extended and can easily take points away from us. So we have to be
cautious. Thanks.

Emini Futures Trading Analysis- 13Dec2016

sp500-futures-daily-chart-analysis-13dec2016

Emini S&P500 futures have hit 2270 today, extending past our previously published technical target of 2260. However, selling pressure can rapidly emerge and increase around 2260 level. The futures were running at par with index prices during the early part of the rise from 2200 to 2250. The futures are now running at a discount to index prices, indicating increasing amount of futures selling.

A correction from current levels is possible, and the futures can go down till 2230 without breaking the uptrend. Traders may look for a Sell trade below 2250 for 10-15 point gain.

Another Emini futures trading strategy at current levels is to stay long above 2250, with 2250 has the Stop and take profits at every 10-15 points gain. If you see 5-10 point gap down one of these days, that could also be used for selling with 10-15 points gain.

Overall, there can be no high conviction short selling as long the futures are above 2200. All short trades above 2200 are tactical, only with the aim to gain 10-15 points from the periodic corrections arising due to profit taking in this big rally spanning Nov-Dec 2016.

Emini Futures Trading Update- 01Aug2016

This is an actual email sent to subscribers on August 1, 2016.

Hello Folks, the futures are currently at 2163.
The S&P500 has been facing profit booking, but the upmove can start again
if corporate earnings play out well. The US Fed interest rate hikes are
now not seen become October, so that is a comfort factor for the market.

The base case for S&P500 index is to move higher towards target 2200.
But August has been volatile in recent years, bringing different reasons
every time. So we must be cautious. Downsides can emerge out of nowhere
and in such a case, long unwinding can rapidly take the S&P500 index back
to 2000-2050 levels. Continue reading

Emini Futures Trading Update- 06July2016

Following is our email sent to subscribers on July 6, 2016.

Hello Folks, the futures are currently at 2086. They have recovered nicely from day low of 2066. However, selling pressure is visible on daily charts, and today’s lower level buying may not hold if fresh round of selling comes. At the same time, the V-shape recovery from lower levels after Brexit is impressive. It is possible that 2100 on futures will get tested again.

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Please note our Emini Futures Trading Strategy for this July month: The 2053 number in futures is still intact as the dividing line for positional long and short trades. Below 2053, we start a short trade with 2063 as stop. Above 2053, we start a long trade with 2043 as stop.
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* Traders with 1-2 contracts: There is no trade as of now for you.
* Traders with 5-10 contracts: You may buy 1-2 contracts at 2086 for target 2096, with Stop 2076. This tactical trade can play out by Friday. Thanks.