Princetontrader Futures Trading Education Daily Report March 14, 2017
The S&P Futures are in a battle between some familiar areas on the chart. Price has found support at the daily midband and weekly pivot. Price has found resistance at the 9 day sma. You can see the dynamic of that battle on the charts this morning. The impact of this four-session ping pong game is that the daily Bollinger Bands are now coming back together. This compression will give way to a decent expansion that should define the directional trade for the remainder of the month but here’s the trick. Don’t anticipate the direction or the timing of a Bollinger Band expansion. Being early is a great way to get chewed up in a bunch of false starts (like yesterday if you overtraded the day) and being early and wrong on direction is worse. Expansions that are real are violent. It’s best to be patient and trade good setups even if that means you take fewer trades a day while we are compressed. We did 3 regular session trades yesterday. On Friday, we did eight. Why? Better tape. Trade (or don’t trade) the tape you are given not the tape you want.
Monday's Post: "The S&P Futures successfully held the daily midband last Thursday and Friday. That coupled with support at the new weekly pivot has made for a decent rally this morning up to the area of the 9 day sma. Bulls want to convert the 9 day sma and gain control of the tape. Conversion of the 9 day opens up a potential test of the 2400 area this week. Bears need to fight back and make a lower low below 2354 in order to have the move viewed as a bear market rally. If bear could achieve that we would find ourselves in a sell rallies tape. Until that occurs the lean is to buy dips."
Friday's Post: "The S&P Futures are in the process of rolling from the March contract into the June contract. People get mystified by “the roll.” Just understand that it is an administrative exercise more than anything these days. Spread traders are few and far between these days. The most impactful thing the roll does these days is screw with the charts for a day or two. On to the market… We discussed a daily midband test all week as the next strep after Bears were able to convert both the weekly pivot (2380/2376.75 June) and the 9 day sma (2373/2369.75 June) into resistance. We tested and tried to convert the daily midband on Thursday. The area was defended on the first test as we mentioned. We are now into the next area of the thesis. We are seeing one of two things with this bounce: a bear market type rally that the bears will defend and create another lower low or the beginning of an up move off of a higher low established at the daily midband. Either scenario is plausible. I have to give the bull scenario the advantage due to the current uptrend we find ourselves in on longer term timeframes. If the Bears can turn this around and break the Thursday low then it would open up a potential move to the lower band and have sell rallies as the baseline position for the short term. Should be an interesting couple sessions while this plays out."
Thursday's Post: "The S&P Futures remain is pullback mode from the week old 2401 high. The Bears have sealed the Weekly Pivot (2380) and the 9 day sma (2372) as resistance. The daily midband (2356) is open for a price test. Standing in the way are perfectly matching Globex lows of 2359.50. Bears top priority will be to break those lows. If the 2359.50 lows are allowed to stand all day that is the type of opportunity Bulls will use to establish reliable support and begin to push higher as we get into the end of the week. If the more typical ES scenario plays out we should see more rally selling similar to yesterday. The Bears have had weekly pivot on their side since the Sunday open. That coupled with the conversion of the 9 day from support into resistance places the advantage with the Bears for the day."
Wednesday's Post: "The S&P Futures continue to show increased volatility which has made for improved two-sided trading opportunities. The Bears held the 9 day sma and have now converted that level to resistance. This opens the daily mid-band for a test maybe not today but over the course of this week. The Bulls want to hold last night’s Globex low in the 2359 area. Bulls need to start taking back key areas like the 9 day in order to get weak shorts covering. The 2401 high is now almost a week old. As this high establishes itself we can begin to gain more confidence that a short term high is in and that the next battle will be fought at the midband."