S&P long opportunity As shown on the chart, I'm waiting for price to retrace into the descending trend line, that matches with an untested demand zone for a long opportunity targeting the highs/liquidity.
The risk is minimal, just below the zone.
MES1! trade ideas
Quiet dayNot surprising that national holiday on Thursday created a quiet shorten trading session in the S&P 500. The bias is for our move higher on Friday.
Es Target and Levels for July 4thThis week my main target in ES was 5582 from Tuesday’s failed breakdown at 5506. We hit it. 5596 was next up, been basing here all night. Holiday today, hold runners/do nothing As of now: As long as buyers are above 5582-78: 5603-5607, 5615+ next up. Dip if 5578 fails
2024-07-03 - priceactiontds - daily update - sp500Good Evening and I hope you are well.
overall market comment
Indexes - SP500 and Nasdaq outdid themselves today again. You still can’t convince me this is another breakout above. SP500 is still marginally higher and it’s a trading range at the highs. Nasdaq broke above the bull wedge and channel and I absolutely expect it to fail over the next 1-5 days and trade down below 20000.
Commodities - Gold had a huge bull break above previous support and above the upper triangle line. The pullback tested that line and market held above. If bulls confirm this tomorrow, we will see 2400 and probably higher again. Oil printed a lower high below 84 but bears would need strong selling from here on and a lower low below 82 to confirm it. Oil could trade more sideways before another breakout to either side.
Bitcoin continued perfectly inside the bear trend and dropped below 60000 again. Bulls might try one more time to get above 62000 but if this one fails, decent chance we will test 50000 next. It’s a strong sell the rip market and you should not look to buy.
sp500 e-mini futures
comment: Strong follow through for the bulls since bears could not keep it below 5580. Made a new ath but still not above 5600. Bulls were strong enough that we can expect 5600 to print at least once. Can they get another push up? I have no idea. Still inside the margins of this trading range at the top but I won’t rule out that we can’t print 5650 or higher. Today’s data was really bad but market did not care. No reason why it should turn around tomorrow on low volume or on a Friday. I won’t get tired writing it. If you are bullish at this stage of this bull cycle, no one can help you. Not saying you should not get long on days like today but your long term longs should have a tight stops. Once the euphoria vanishes, it will go down fast when everyone will look for the exit. It’s as unsustainable as it gets.
current market cycle: Max bullishness & peak bubble territory. Literally the peakiest of the peaks. Mother of all bubbles. Will end over the next weeks. —unchanged
key levels: 5560 - 5600
bull case: Bulls want to keep the party going and if they can stay above the 1h 20ema, they could do another leg up. No deeper reasoning here. If big green bars appear again, buy.
Invalidation is below 5560.
bear case: No idea if bears step aside for another leg. Can see this turning here after more sideways movement. I would not expect big swings on a US holiday tomorrow.
Invalidation is above 5610.
short term: Neutral af again. At multiple resistances I won’t do anything. Will look for longs on strong buying near the 1h ema or the lower bull wedge line. If bears appear, need a break of both mentioned before shorting.
medium-long term: Bearish. We will see 5000 over the next weeks again and 4600 over the next 12 months. Will update this time and price wise over the weekend but I expect to at least see 5000 over the next months in 2024. —updated weeks to months.
current swing trade: None
trade of the day: Buy anything. 5m 20ema was your guide today. Could have literally bought any touch.
Confident closeThe close in the S&P 500 at the end of Thursday's trading session was a sign of confidence. However, will these buyers that entered the market be able to give another strong push with holiday trading for Fourth of July. I don't expect to see that type of behavior. A positive close on Thursday would be expected.
ES continue with uptrend On ES , it's nice to see a strong buying reaction at the price 5539 .
There's a significant accumulation of contracts in this area, indicating strong buyer interest. I believe that buyers who entered at this level will defend their long positions. If the price returns to this area, strong buyers will likely push the market up again.
The S/R zone from the past and high volume cluster are the main reasons for my decision to go long on this trade.
Happy trading
Dale
Long ES if it pulls back to 5543After today's big rip to the upside, I am planning to play a continuation to the upside on Wednesday, July 3. I've marked the areas of high resting liquidity, and I believe the 5543 level is the strongest to hold.
I could also see a higher pivot, around 5550, but I'm playing it safer with the holiday coming up.
S&P500: Final Sprint!Although the current wave 5 in turquoise has already reached a significant size, and the high should be placed soon, we cannot yet regard it as completed. We therefore continue to give the movement room to the upside. As soon as the high is established, the index should turn and head for our magenta Target Zone (coordinates: 4681 - 4434 points). However, please note our alternative scenario (40% probable). In this case, the index would place the top of the green wave alt. (3) with the next high. Consequently, a reversal and a transition into the wave alt.(5) could already be expected in our green Target Zone (coordinates: 5056 - 4878 points).
ES Levels & Targets For July 3rdYesterday morning, ES printed an excellent failed breakdown of the previous days low at 5506, triggering longs for seasoned buyers. After that, all upside targets I shared yesterday hit with ease, and now ES has been basing all night. Half trading day today. As of now: As long as buyers are above 5558, 5575, 5582 next up. 5558 fails, dip to 5542
$ES bounce areas Here's the areas I'm looking at for bounces. These areas often provide bounces of 6+ ticks, typically more.
5556.75
5555.50
5547.25
5545.50
5538.00
5536.25
5524.50
5523.00
A Sprint and a confident closeAlthough the S&P 500 market had a strong move which acts like a Sprint and a strong close which implies confidence, the same type of action is not expected for Wednesday but rather the market catching his breath would be typical behavior.
AMP Futures - Chart SettingsIn this idea we will go over all the different chart settings in Tradingview.
ES offers really good opportunity to upside and downside Watching 5537 for calls and below 5515 for puts.
This week may not offer this move but want to be around when it goes either way.
Great R:R opportunity given either scenario
ES Targets For TodayFor the past week it's been about one level: 5519…which paid out over 150 points so far in total. Last night, we tested it for 16th time, bounced 8 points right up to 5527 target, then lost it. Currently attempting to hold a major support. As of now: 5503-06 is all a major support with 5519 the obvious backtest area. Buyers must reclaim it to put in a bottom. 5503 fails, dip to 5492-24ish
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Neutral zone tradeThe S&P 500 structure over the last few days is a sideways market that indicates it's gotten high enough to find sellers on the upside and long enough to find buyers on the downside which creates what I call a neutral zone trade. Although sellers are entering the market in the Asia time zone, the issue will be can they break this market to new lows of the neutral zone. This is not expected.
Navigating Frothy US Equities with S&P SpreadsNavigating frothiness in US equities requires both caution and tact. With the S&P 500 nearing its all-time high amid flashing recession signals, investors must be vigilant with volatility during upcoming earnings season, driven by outsized expectations.
This paper explores the persistent recession indicators and forces at play during upcoming earnings. The paper posits a spread trade using CME’s Micro E-Mini futures (Long S&P 500 and Short Russell 2000) to maintain upside potential with reduced downside risk.
RECESSION RISKS PERSIST AS RATES REMAIN HIGH
On Friday, the PCE Price Index (Fed’s preferred gauge) showed inflation cooling to 2.6% in May, in line with expectations. Price pressures are slowly abating.
Numbers aside, the broader economic landscape presents a complex picture.
Signals from the job market point to unemployment claimants at a record high for the past two and a half year with job openings shrinking drastically. Personal earnings were higher than anticipated in May (0.5% vs 0.4%), but spending was below expectations. Consumers are being more cautious. Mint Finance covered these nuances in a previous paper .
Housing is flashing weakness as new housing starts hit a four-year low in May. Soaring prices and steep mortgage rates are weighing on demand.
The Fed’s policy path remains unconfirmed. However, consensus point to a rate cut as early as September. Even if that happens, rates are expected to decline gradually.
Source: CME FedWatch
Despite risk of recession, the S&P 500 has had an exemplary showing this year, trading near their all-time high. YTD performance of 15% in 2024 has been far higher than the 74-year average of 4%.
Yet, the performance has been increasingly top-heavy. Nvidia, Apple, and the rest of the tech titans have contributed much of the gains in the broad S&P500 index as it is market cap weighted. The index is heavily reliant on and sensitive to the performance of these mega-caps.
The equal-weighted S&P 500 index is up only by 4% in sharp contrast. The spread between the S&P 500 and its equal-weighted counterpart is near its highest point since 2008. The spreads between the S&P 500 and both the Russell 2000 and S&P Midcap indexes have reached multi-decade highs.
Outperformance was re-affirmed after the recent earnings season. Mega-caps crushed EPS and revenue expectations and reported phenomenal guidance while other stocks, especially utility and energy sector reported revenue and EPS figures below estimates according to FactSet report .
Rallies in mega-cap stocks are being driven by idiosyncratic tailwinds, such as advancements in AI. Meanwhile, slowing consumer spending in the US is raising concerns for the broader market.
RISK OF SHARP CORRECTION WARRANTS SPREAD POSITION
According to FactSet , Q1 earnings season was positive. Only 19% of firms reported earnings below expectations. Actual average EPS YoY growth for the index was 5.9% (above 3.4% expected as of March 31).
Frothiness in the equity market is palpable. Consistent outperformance by mega caps is baked into investor expectations. Strong earnings are already factored into prices, as evidenced by the S&P 500's P/E ratio of 28.38x (far higher than the 10-year average of 20x translating to a 42% above average earnings expectations). Average P/E ratio in the best performing tech sector is even higher at 37.47x.
Even minor shortfalls in guidance or revenue/earnings can lead to significant corrections in such a climate. The FactSet reports that 31.8% of firms which beat earnings EPS estimates by up to +5% saw average price decline of -0.9%.
Source: FactSet Research
In fact, overall, positive earnings only drove a 0.9% increase in price (1% 10Y historical average) while a negative earnings report led to 2.8% drop (-2.3% 10Y historical average).
Source: FactSet Research
Market frothiness elevates risk of a sharp price correction in single names during Q2 earnings. Analysts are concerned as expectations for Q2 EPS YoY growth have been lowered from 9% on 31/March to 8.8% as of 22/June.
Despite this, mega-caps remain in solid position. Robust demand for AI, buoyant advertising revenue, globalized revenue streams, and substantial market dominance have positioned them to continue growing at a disproportionate rate.
In case the upcoming Q2 results pan out similarly to Q1 in favor of mega-caps, the S&P 500 will continue to outperform the broader market indices.
HYPOTHETICAL TRADE SETUP
The S&P 500, with its high concentration of mega-cap stocks, is likely to perform better than broader market indices in the coming earnings season. However, recession signals are also flashing.
The S&P 500 does not perform well during recessions. Over the last four recessions, it has declined an average of -14%. Comparatively the spread between S&P 500/Russell 2000 spread has increased 1.7%.
The S&P 500/Russell 2000 spread has also outperformed during the six-month preceding recessions.
Given the S&P 500-Russell 2000 spread's historical outperformance during recessions, a spread position presents less downside risk compared to an outright long position in the S&P 500.
This strategy also maintains a bullish outlook on the top-heavy S&P 500's potential to outperform in the upcoming season.
Moreover, the spread trade preserves the upside potential in the ongoing rally, as its performance has been comparable to an outright long position in the S&P 500.
A view on the spread between the S&P 500 and Russell 2000 can be expressed using CME Micro E-Mini Equity futures. At 1/10th the size of the full-size E-mini futures, the Micro contracts allow for smaller trades with more granular exposure.
A long position in the Micro E-Mini S&P 500 futures expiring in September (MESU2024) can be offset by a short position on 2 x Micro E-Mini Russell 2000 futures expiring in September (M2KU24). This position is highly margin-efficient as CME offers margin credit for this spread.
Hypothetical trade set up in summary requires entry at 2.69x, with a target at 2.78x coupled with stop loss at 2.6x.
The simulated payoffs are described below.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
DISCLAIMER
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Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
AMP Futures - Economic CalendarIn this idea we will demonstrate how to access the economic calendar.
7/1/2024 Daily RecapAnother choppy day today, but we did have a strong close. VX got destroyed once again. We'll have to see how the market reacts to Powell tomorrow, but other than I don't expect much. I still have longer term short bias, TNX had a huge move up today and I expect that to continue. I'm ready for either outcome, we should get a big move soon after NQ chopping around 20k like this.
2024-07-01 - priceactiontds - daily update - sp500Good Evening and I hope you are well.
overall market comment
Indexes - Quick one today because markets did the obvious thing and we learned nothing from this trading session.
Commodities - Gold is not worthy to be written about today. Oil was bullish as expected to 83.40 and 84/84 were my targets for many weeks now. Bulls can do some more here but it should not go much above 84. Best bears can hope for here is sideways.
Bitcoin broke strongly above the bear trend line but failed at the daily 20ema. Bears need to keep it below 64000 or we will see much higher prices again. Can short this once we trade back below 62400.
sp500 e-mini futures
comment: Market has the daily 50% pb almost exactly at Friday’s close. You do not need to analyse this deeper. Market is in balance and 5523ish is the fair/agreed price. Prominent tails above and below bars, tells you that it’s a trading range and you should buy low and sell high.
current market cycle: Max bullishness & peak bubble territory. Literally the peakiest of the peaks. Mother of all bubbles. Will end over the next weeks. —unchanged
Smaller tf = trading range
key levels: 5500 - 5550
bull case: Market is in balance. Bulls need break above 5550.
Invalidation is below 5500.
bear case: Bears need break below 5500 and preferably a daily close below.
Invalidation is above 5550.
short term: Neutral af.
medium-long term: Bearish. We will see 5000 over the next weeks again and 4600 over the next 12 months. Will update this time and price wise over the weekend but I expect to at least see 5000 over the next months in 2024. —updated weeks to months.
current swing trade: None
trade of the day: Buy low, sell high and scalp. Use small position size and wide stops to scale in. Best trades though were selling the expanding triangle bar 30-34 where market should clear resistance 5537 and that was also the us open price and we just sold off for 30 points. Next trade was the bar 41 entry bar after a very good signal bar 40. Buying near 5000 was almost a no brainer but since bar 37 was so big an climactic, I hesitated as well.
3 Technical Reasons ES Futures Will Hit 5450In this video, we dive into the 3 key reasons why ES futures are on track to hit 5450. I use Bollinger Bands, VWAP, RSI and a 5 day SMA.
Using CME Groups Event Contracts For ES1! In A Choppy TapeIn this video, Anthony Crudele explains how to use CME Group's Event Contracts in the E-mini S&P 500 as a way to participate in the market in a choppy market environment.
