Emini Futures Trading Update- 17Nov2016

The S&P500 Emini futures are currently at 2180. The futures are moving up quickly on market open, probably after seeing the US Fed commentary from Janet Yellen, that the rate hike in Dec will be along expected lines (25 bps), which is already factored (supposedly) in the current price.

So there a fresh short-term buy signal this morning above 2175, and the futures are moving up in a very clear way. Traders can stay long above 2173-2175 levels and aim for 2183-2185 levels.

This clear upmove helps up to put a tighter stop because if this upmove reverses, then it can easily fall to 2160 and we don’t want to hold the long anymore in such a case. The Stop Loss for any long position should be at 2172-2173. This is one of the rarer cases when we can put a tight 5 point stop below buying level, because we don’t want to part of any downward reversal from current level.

Please Note: Dec 2016 is the month of US Fed rate hike meeting. Dec 2015 was the most deceptive month of year 2016, when almost every every analysis produced wrong trades and we got lot of whipsaws.

The key learning from Dec 2015 was to be very careful with Dec month around the US Fed meeting. In Dec, many US funds are winding down their positions and market participation could be less (though unlikely this year because of new President factor), which can create larger swings. We must be very cautious. Thanks.

Emini Futures Trading Update – 23May2016

Our trading last week was far from optimal, and we had many stop losses from the daily change in market direction, just around our key level of 2053 in futures. The US Fed rate hike scenario in June significantly increased volatility and paused the upmove of the S&P500 which was clearly visible till a week back. In fact, we had a profitable trade with 15 points running when the US Fed meeting notes came out and that trade went down to hit 10 point stop loss within minutes.

Please see the chart below. The S&P500 futures have been trading in a narrow channel of about 45 points band, and they have been changing direction almost everyday, thereby hitting any stop loss that is less than 20-25 points, and then targets of 10-15 point targets are getting hit. Its like a mixer and its not profitable.

In such a scenario, the only way to trade without sacrificing stop losses is to widen the stop loss to the outer levels of the channel. So the stop for long trade would be 2020, and stop for short trade would be 2060 on the futures.

The uptrend which started in Feb has been closed in May after last week’s movement, and now there is a strong bias for downside moves. Long trades should be taken only above 2060, or at the lower end of the channel around 2025-2030 with a tight stop of 2020.