Princetontrader Futures Trading Education Daily Report March 16, 2017
The S&P Futures were taken into control by the Bulls yesterday. This has been a pattern we have seen many times over the past few years. The Bears allowed a double bottom at 2354 then failed to convert weekly pivot, 9 day sma or the daily mid-band as resistance. A series of higher lows follows and we find ourselves less than 15 handles from the continuation all-time high at 2401. Over the past couple of years, the futures have liked to close out the contract at contract highs. If that happens again then we should continue to grind toward 2401 today. During yesterday Daly Wrap Up I discussed the 2380 area as being the key to the overnight trade. It was a risk marker again a long since 3pm ET and provided 2-3 very nice day maker trades. I hope everyone took advantage.
Wednesday's Post: "The S&P Futures continue to battle over control of the daily midband. The tape yesterday was pretty sloppy after the initial move down. We had resistance at weekly pivot after bears avoided matching lows at 2362. However, what could have been a trend down day failed to follow-through when the s3 area at 2354 held and has set up a support area with the Friday low and 2354 and yesterday’s low at 2354.75. Bulls made a sloppy whippy grind higher from there. The weekly pivot had a chance to hold in the overnight session but it failed to be resistance so we find ourselves trading in the same area that we were yesterday. Today’s big deal in the Fed. Announcement at 2pm and a presser at 2:30pm. We are traders not economists so we trade what we see. We don’t game the Fed and make assumptions about what price will do after the announcement. Trade what you see. In the room, we will follow our method that has served us very well. Get a reaction range watch price and find the setup."
Tuesday's Post: "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."