HOW DID THIS:
$ES_F Daily V bottom. Expansion > 1920 = test of year high. #psa pic.twitter.com/w558cz49I0
— Chicagostock (@Chicagostock) February 22, 2016
GET TO THIS?:
Commented on StockTwits: $ES_F Completes V bottom objective of 2042 from 1920. $SPY $SPX https://t.co/j102MzSsXB pic.twitter.com/yEP6aGyTfU
— Chicagostock (@Chicagostock) March 19, 2016
In December’s article “The Yellen that Stole Christmas”, the point was to show how buyers in the SP500 were caught above 2040, and needed a Yellen rescue. The market attempted to breakout to start December, however the rug was pulled from underneath as Yellen reiterated a rate hike later in the month. After bluffing the market for 2 years on this rate cut, the call fell on many deaf ears. So it was. Buyers were left caught at higher prices, betting on a “Santa Claus Rally” only to be hoping for Yellen to save Christmas. For the first time in 6 years and exactly 3 years from December 2012’s FOMC that placed a 6.5% target on NFP for a decision on Fed Funds rate, the FOMC reset the market and hiked the Fed Funds rate by a quarter point. Bulls did not get what they were looking for and saw the market fall back to retest 1982 support. The level barely held on December 18th, as the market rallied back for Christmas holiday and the “Santa Claus Rally” was actually a gift from Yellen for stuck longs above 2040 to “breakeven”, or as we like to call it “get out of jail free card”.
When the FOMC decided to place a 6.5% target on NFP rates to justify raising the federal funds rate, the SP500 was trading 1427, gold 1718, US dollar 7985, and 30 year bonds at 148.
“… the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent…” (FOMC 12/12/12 source).
Just days after this release, we highlighted the weakness in gold: Whats With Gold? FOMC Spooks Market. Double Top Eyes 1250.
Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Video content hosted by third party.
Excerpt from CST Pro subscription email sent on 04/27/15 for trade day 04/28/15. As highlighted in the report, 209050 was a long trade with specific stop and target levels. Bottom left of image is excerpt from our chat, highlighting Chicagostock's intraday analysis, followed by a chart of the intraday Emini SP500 on 04/28/15.
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RISK DISCLOSURE: PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING FUTURES AND OPTIONS IS SUBSTANTIAL AND SUCH INVESTING IS NOT SUITABLE FOR ALL INVESTORS. AN INVESTOR COULD LOSE MORE THAN THE INITIAL INVESTMENT.
CST Emini SP500 Report:
Example and excerpt of ES analysis sent on 04/22/15 for trade day 04/23/15 through CST EMINI SP500 Report:
Thursday 04/23/15 Emini SP500 Chart:
Low: 2087.50
High: 2114.50
Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Video content hosted by third party.
(click chart to enlarge)
The SP500 has come a long way. Starting the year at 1838 to put in lows of 1732 and make highs of 2079 as of recent. The 2nd half of the year has seen volatility expand. July began just as January did, a very tight trading range followed by a small pullback before rallying into new highs. Difference in the 2nd half was the new highs was rejected in September, with the market falling apart in October to take out the August low and fall into 1813, testing major support based off the April lows. The break of the multi year bullish channel, was followed by one of the most massive and violent short squeezes ever. Just as early October the market put up a strong fight with violent short squeezes before finally letting go down to 1813, the move back to 1970 was just as violent. The reversal from 1970 to 1813 and back to 1970, was a major short squeeze and V shaped bottom. After this short squeeze, it was time for the market to take a breather, consolidate, attempt to build a base and support for new longs to join for a new leg up. What happened was a different story. Rather then allowing buyers this opportunity… Halloween 2014, just as the SP was pressing against major resistance against the September highs, BOJ came out with an expansion to their QE program, lifting the lid above the September highs and seeing the SP trade through 2k for the first time ever. Rather then allowing the cool off period at 1970, the BOJ squeeze forced buyers to chase the market above 2000. November made early lows at 1995, before grinding up to into highs of 2072 going into the Thanksgiving holiday. During this period, the cash market worked very hard to open and settle the market at its prior close, walking a very tight line. Following the holiday, the market saw a gap open lower down to 2048, only to becoome a bear trap as the following day the market squeezed back above 2060 to save cash buyers and grind out new highs. Draghi came out on the 4th of December, touting a ECB QE program in January which led the market to scetch out another new high at 207725. All of these highs were made by a few points and saw profit taking into them. The following day was NFP and the SP managed once again to squeeze 2077, print highs of 2079, and fail to hold above. This led into a break out failure, seeing the market fall back to retest the December 1st low of 2048.
The SP’s move below the Dec 1st low of 2048, has confirmed a short term failed breakout above 2077 and a double top. The move now is testing major support down to 2015 based off the November low of 1995 that led to the chase higher. The current break has caught longs off guard and sellers are looking for blood to press the market lower. Failure to hold the November low of 1995, confirms a failed breakout above 2000 as the market retraces back below the BOJ QE breakout and leaves buyers who chased above holding the bag. First major downside support is seen down to 1977 to retest the breakout point from October’s V bottom 1970-1813-1970. The question that will arise and will be seen is will there be buyers left to buy the market at this level, after the BOJ forced them to chase above 2000? This will leave for a thinner bid on the downside and more longs who are caught giving way for volatility to expand. A failure to hold 1970 gives room down to retest the 1813 low with major support down to 1840. The objective for the sell side is to take out these lows and test the 2014 low of 1732 with support coming in at 1750. To reverse current momentum, buyers need to recover above 2050 to retest resistance at 2068 based off the highs of 2079. The objective for the sell side is to settle the market below the December 1st lows to establish a weekly sell signal and bearish engulfment.
The recent reversal in the SP500 has reminded us of a similar time the charts and reversal felt and looked the same. The above chart is from 2011. As seen the market made an early high of 1335 in February, correcting down to 1241 before rallying back to new highs. New highs were made on what was called the "Bin Laden" high. On the news of his capture, the SP printed the highs for the year at 1373.50 and turned lower to retest the previous 1335 lows made in February. This retest was followed by a "U" shaped reversal that recovered back to where the market failed at 1348 on the 1st of June. This reversal failed to stabilize and push through the highs, leading into what developed the right shoulder for the 2011 head/shoulder top and crash down to 1080 that was fueled by the debt downgrade. QE 2 ended in July 2011, just as QE 3 is expected to end 10/29/14.
After attempting to hold last Tuesday, the market rallied to 189275, only to meet major resistance against the broken August lows of 1890. This led to a narrow range last Tuesday, barely holding Monday's 186375 low. Globex saw the market break this triple bottom against 186375, giving way for the 189275-186375 range to be expanded down to 183475 (189275-186375=29, 186375-29=183475). The market fell on Wednesday to complete this target, however continued another 20 handles lower into 1813 to test major support from the April lows, before seeing a squeeze back to the 1863 level. The following day saw a retest of the lows which held, creating another range, 1863-1813. The range gave room for the market to expand up to 1913 (1863-1813=50, 1863+50=1913), or down to 1763, depending if the ES was able to breach the top range at 1863, or bottom range at 1813.
On Friday the SP500 recovered above 1863 and attempted to target Tuesday's 189275 highs, running into 189175. The break above 1863, gave the market room to expand up to 1913.
On Monday the SP took out last Tuesday's 189275 high and found support down to 1870 before rallying into close at 1900. Today, 1 week after the failed 189275 high made last Tuesday which was followed down to 181300, we have recovered back above those 189275 highs and completed the short term range expansion target of 1913. The move now retests major resistance based on the double top made at 1930, along with revisiting the scene of the crime, being the 1920 major support level that was tested early October before finally giving out and falling 100+ handles. Old support becomes new resistance. A move through 1980 is needed to reverse momentum and create a V bottom on daily charts as rallies into 1920-1958 offer sellers an area to defend.
Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Video content hosted by third party.
Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Video content hosted by third party.
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Took all day to get that fill, however 7375 provided a level to defend on the short side. Since the risk is 4 points, if the market gives us 4 points in return, we scale out to lock in base hit and reduce exposure. Stops lowered to entry, allowing market to either continue lower to give the "homerun" setup, or move back to exit trade.
Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Video content hosted by third party.
Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Video content hosted by third party.
Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Video content hosted by third party.
Last week, we took a close look at the intraday SP500 action and shared the view through vol windows. (Click to view). This week, we couldn't help but notice a very similar pattern. Take a look below at the chart comparison between last week vs this week, without Friday completed (tomorrow).
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Here is an example of a trade posted in the nightly email and how it is managed intraday:
Trading is a game of price discovery. Like poker, you don't want to be on the wrong side when the bluff is called, or the music stops. The market is all about calling bluffs. Before doing that, it also has to set as many traps and catch people on the wrong side in order to gain enough fuel for the opposite direction. Traders caught wrong are the fuel that move the market by having to cover their shorts or sell their longs. The market trades price and reaction to those price levels create the boundaries for buyers and sellers to defend. Below are this week's 10minute intraday charts of the Emini SP500 futures.
Solid horizontal lines = Vol windows
Dash horizontal lines = intraday pivots
MONDAY:
The market came back after the weekend, having seen Friday break an 11 week winning streak. The market started Monday's cash open where it left off from Friday however was met with immediate selling that broke below Friday's 1968 lows to shake out longs and lure in shorts as lower vol window breached to establish bearish bias. New lows down to 196075 made before turning around to recover above lower vol window and run into the cash open. As sellers defended the open, the market pulled in to retest the lower vol window only to see sellers unable to continue below, keeping shorts trapped and giving way for a squeeze into the close to reverse the intraday bear bias.
TUESDAY:
Monday's short squeeze reversal spilled into Tuesday with a cash open at 1977. The "turn around" Tuesday attempt was rejected as the market failed the test of the upper vol window that coincided with 1980 as the level the previous Friday opened below. This retest led to rejection below the intraday low and into the lower vol window to retest 1968 support from Monday. First test sees bounce back into the opening range only to fail to attract buyers, seeing push back to the lows. Second time around buyers were unable to hold, giving way for a close below the lower vol widnow to squeeze longs.
WEDNESDAY:
Wednesday saw the market open 10 handles from Tuesday's close right into Tuesday's cash open. This was rejected with highs of 1974 before turning lower to breach the lower vol widnow and establish a bearish intraday bias. New lows were made down to 195650 before rounding a bottom and seeing a short squeezed fueled by FOMC statement. The squeeze was again rejected at the cash open with close below the lower vol window.
THURSDAY:
Wednesday's FOMC statement caught longs trapped as the market settled at 196550, only to open Thursday 14 lower at 1951. Longs were caught off guard and forced to liquidate, seeing the lower vol window breached to establish a bearish intraday bias. July lows of 194250, reversing the market from new highs into new lows going into the close of the month. The failure to recover 1940 led to margin selling and expansion of the lower vol window into the close.
FRIDAY:
Friday saw Thursday's weak settlement spill into the overnight session with the market falling into 191050. The cash market opened above 1920 to see a squeeze through the Globex highs fail to hold as the upper vol window and pivots kept a lid on prices. The rejection was followed by a move below the cash open and breach of the lower vol window at 1915 to establish a bearish intraday bias. New shorts were lured in below this level to see the overnight lows of 191050 taken out by one tick at 191025 before exhausting. This failure to move lower led to sideways consolidation before turning back above 1915 to trap shorts and use as fuel for squeeze. The squeeze led to retesting the cash open only to see buyers unable to move past sellers defending the bounce and intraday bear bias. With buyers failing to pick up and continue squeeze, sellers too back control to drop back 10 into 1916 before settling at 1918. Going forward, longs are now vulnerable to a open below 1915 to target 1910 for another shakeout. Shorts are squeezed on a move through 1926.
Top of the screen is a short term chart based on short term signals. First signal was a short @ 198250 with a 4 handle stop. Next signal was @ 198350 with a 3 handle stop. 198350 short saw first target @ 198050 (1x risk), then stops moved to breakeven which was kicked out on the bounce to 198350 late afternoon. 198250 short saw first target @ 197850 (1x risk), stops lowered to entry and the runners were covered this morning @ 197350.
Bottom of screen shows longer term setups based on daily/hourly charts. First signal short @ 1982 with a 5 handle stop. Target 1 taken out @ 1977 (1x risk), target 2 covered this morning @ 197300. One left with a break even stop and a 1952 target.
Here's how it looked yesterday just after the close http://stks.co/f0qsu
Risk Disclosure: Futures, foreign currency, and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one's financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Video content hosted by a third party.
Live Trade Room Example: This presentation is for educational purposes only and the opinions expressed are those of the presenter only. All trades presented should be considered hypothetical and should not be expected to be replicated in a live trading account.
Hypothetical Performance Disclosure Example: Hypothetical performance results have many inherent limitations, some of which are described below. no representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points that can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect trading results.
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