Trade Date 10/20/ 2020 – S&P 500 Futures: Trip to Nowhere
After a 37.50 handle sideways overnight range, the S&P 500 futures opened Wednesday’s cash session at 3433.75, up 2.50 handles, and then traded up to a daily high of 3457.25 just after 9:00 CT before reversing and selling down to the daily low of 3424.50 at 10:15. For the rest of the session, the futures would remain inside that range with a late morning high of 3451.50 printing.
Tthe noon hour throughout the afternoon saw a continued slow trade inside the morning range before settling the day at 3433.50, up 1.25 handles on total volume of 1.65M contracts traded.
In the end, the overall price action favored a range-bound strategy as it was the second slowest session since the first of September.
In the Tradechat Room
Another sleepy time MOC, something is building. The 15:50 reveal was just -149M with all the action starting down at 15:00 and just a sideways shuffle into the close.
Third wave underway and hospitalazations following. Deaths just begging to show an up turn.
World daily deaths and new cases both on the rise
To use our table, go to https://t2r4.com/cv19/views. Each column is sortable and if you click on a cell you will get a time-based chart of the state.
Wear your masks! Stay home! Take your Vitamin D!
Chart of the Day
COVID19, Election, Stimulus, FBI ‘Shake & Bake
My daughter is having her baby as I write this and the PitBull has said and written in his books that during personal times like these it is best to take a step back. While I did not trade yesterday I believe my ‘view’ was pretty much on target. Back on Monday, Tuesday, and Wednesday, March 3rd, 4th and 5th was the last time the S&P 500 futures had an ‘inside day followed by an inside day’. I continue to talk about the size of the average size of the RTH daily ES trading ranges as a way to remind people how volatile we have gotten, Tuesday’s range was 43 handles, yesterday’s range was smaller at 32.75 handles, the 3-day average is currently 53 handles, and the 5-day average is 51.12. You may be asking why this is important so let me explain. If by chance you do sell a morning high or buy a morning low and you have the patience, these averages should be part of your daily trading toolbox. As the risk goes up so should the risk rewards. Taking 2 or 3 handles out of a 50+ day trading range doesn’t seem to fit a valid risk/reward ratio. That said, everyone has their own trading profile and I am not here to change yours but to just point out the potential of what good trade location and holding longer can do.
Our view, from the increase in COVID19 across Europe and the US to the presidential election to the ongoing stimulus battle to the report by the FBI that Iran and Russia are meddling in the election, there are a lot of moving parts. This only increases headline risk. Over the past several months, many people have asked me how I determine some of my trading calls and in the past two weeks, I have started to write them down. One rule that has been working great is that ‘the S&P tends to rally early in the week and early in the day’ and based on the early morning price action I think that’s a stand out rule. Yesterday there were several stimulus deal on/stimulus deal off headlines. Personally, I ‘thought’ Pelosi and Treasury Secretary Steven Mnuchin were nearing a deal but now I do not think it’s going to happen until after the election. Our lean is like the rule above says, ideally I am looking to sell a gap up open or the early rallies but if the ES gaps down sharply my lean would be to buy the open and try to hold, again keeping in mind the size of the daily average ranges. And lastly, I do not want to forget about the after 3:00 ET sell programs that have been occurring almost daily. I told the PitBull I was looking for 3380 or lower this week and I still feel this way.
Market Vitals Technical Analysis
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As always, please use protective buy and sell stops when trading futures and options.
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