Nov 3 E-mini S&P 500 Futures: Keep It Simple Stupid Series

The train that keeps on giving

Today’s session was a textbook bull train continuation day from yesterday’s bullish engulfing. It was a relatively simple and easy day as it provided the standard bull train 1HR 20EMA re-entry in the morning at 8AM before the day session opened. It provided the long entry of risking 3 points for 10 setup and it evolved into hitting the last immediate target at 2107. The day session was almost a repeat of yesterday’s bull train strategy where we bought almost every dip to the 5minute 8EMA and 20EMA for scalping purposes. In the afternoon, we shorted at 2109 with a risk of 3 points for 10 setup based on our executed 80% win rate hourly extreme overbought signal and it worked out well just like yesterday’s end of the day short.

Clarification for our intraday ES trades play-by-play commentary:

We use two futures trading accounts; one employs the strategy of trading the hourly chart setups such as risking 3 points for 10 or risking 5-10 for 15-25 types of trades. (eg. LONG at 2093 before the day session opened and sold at 2100 and 2105). The other one mainly focuses on scalping quick 3-6 points using an on trend strategy. 

What’s next?

Daily closed at 2102.50, this is the 9^th consecutive session above the daily 200SMA. It was a standard bullish continuation candle similar to October 23.

All of the immediate targets have been fulfilled 2089.50, 2100 and 2107.

The intermediate targets of 2120 and 2134 are now turned into immediate targets as long as the bull train remains above the hourly 50SMA which is currently at 2088.

This means that the support has been upgraded from 2065 to a trending moving average support. The reason is because the market has major resistance confluences here at 2110 so there’s no failure allowed by bulls here.  

For short-term bears: breaks below 2088, then immediate targets are 2075, 2064, 2055 and 2050.

Plan for tomorrow: Could be the third consecutive up day, which means need to be extra cautious of size management due to the bull train extension. No need to get greedy now. 

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Our Swing Position

-Added 10% IWM Dec ITM Calls in the morning

-Sold 10% IWM Dec ITM calls from October 28 entry near the close

Just locking in some partial profits, IWM swing target is still 120-121

Total = 30% Dec Shorts (SPY+QQQ) and 20% IWM Dec Calls

Nov 2 E-mini S&P 500 Futures: Keep It Simple Stupid Series

The gifts of a bull train

Today’s session really started with Sunday night’s hourly extreme oversold signal that provided us with a great risk 3 points for 10 long setup that we entered at 2066.00. It felt pretty great waking up and realizing your overnight set and forget trade worked out perfectly as it filled the profit limit order at 2076.00.  When the day session opened, we tried for a cute short at 2078 for the risk 4 for 10 setup at the 1HR 50SMA resistance. The bull train quickly obliterated our stop at 2082 and it became clear when it went above the 61.8% Fibonacci retracement of Friday’s high vs Sunday’s low that bears were too weak and lost their battle. We then proceeded to buy every dip as the entire day session was merely just a 5minute 8EMA and 20EMA bull train re-entries scalp long as shown in the “tutorial” post around lunch time. Subsequently, the market fulfilled the immediate targets of 2089.50 and 2100. Then, minutes before the close, we shorted at 2099 for the risk 3 for 10 setup based on our extreme hourly overbought signal and that the secondary immediate target has been fulfilled. The 

trade worked out half decent as it did not get the full 10 points down.

What’s next?

Daily closed at 2093.25, this is the 8^th consecutive session above the daily 200SMA. It was a bullish engulfing candle similar to the October 22 session.

This is quite hilarious and fascinating because October 21 and October 30 both gave the bears false hope with the daily bearish engulfing candle setup just to sticksave at daily 8EMA and squeeze on next day.

Two immediate targets have been fulfilled; the last immediate target still remains at 2107.

Recall the intermediate targets that we mentioned from a couple nights ago. They are still valid; in the case of a bull acceleration breakout. The intermediate targets are 2120 and 2134.

(There’s a difference between immediate targets and intermediate targets. Immediate targets are the high probability targets that we provide with a high win rate since the inception of these updates. Treat intermediate targets as a longer term roadmap in mind.)

For short-term bears: Break below 2065, then immediate targets are 2055, 2050, 2040 and 2030.

Plan for tomorrow: Being cautious of a potential rangebound shakefest/consolidation day based on price channel. We're still trading smaller position sizes this week for the time being.

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Our Swing Position

• Added 10% IWM Dec ITM Calls

Total = 30% Dec Shorts (SPY+QQQ) and 20% IWM Dec Calls

To reiterate: we are not great swing traders; this is a long learning process. Our swing account represents only 20% of total trading dollars and the day trading account represents the other 80%. For example, if the day trading account is 800K USD, swing account is 200K USD.

Nov 1st E-mini S&P 500 Futures: Keep It Simple Stupid Series

Bull train momentum waning
 

Friday’s session was very similar to the previous week’s Wednesday Oct 21 session; they both went above the previous day’s high and then reversed as a bearish engulfing daily candle. It was a standard textbook hourly breakdown overnight with throwback retest during the day session. Then, it had the bear continuation after lunch and closed at the important dotted yellow line support.

What’s next?

Daily closed at 2074, this is the 7^th consecutive session above the daily 200SMA. It was a bearish engulfing candle just like the October 21 session. Bears need a decisive follow through early next week to confirm the bearish rejection setup.

Weekly candle closed as a spinning top, which means the weekly bulls momentum is not as strong as the previous 4 weeks which ended their weeks closer to the highs.

Monthly bulls were unable to close above 2107, which means bears still have a shot for the medium probability of inside month consolidation range setup during November. If swing bulls are serious, there should be no retrace that extends further than 61.8% fib retracement of the October monthly bar which is at 1963.89. If bears fail, then it's straight bull continuation up setup.

Riding the bull train till it dies. Bears need to confirm the bearish engulfing setup just like the October 21^st setup. (Remember, October 22 was a massive squeeze to the daily 200SMA)

Once again, as long as the bull train remains above 2065, the immediate targets are 2089.50, 2100 and 2107. 

For short-term bears: Break below 2065, then immediate targets are 2055, 2050, 2040 and 2030. 

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Plan for the first couple sessions of next week:

Be prepared for short-term trend change and changing up our strategy to short every hourly moving average retest if bears confirm the trend reversal. Until then, continue to BTFD until it does not work anymore. We’re going to use smaller position sizes in this upcoming week until something confirms, protecting profits from previous weeks is pivotal.

Roadmap and thoughts:

Generally speaking, from trading various instruments over the years we’ve noticed that when a retracement on a daily chart closes above/below 78.6% then a full retracement to the 100% becomes very likely eventually. However, we do not have the relevant backtest system to prove this in a statistical manner. Bulls really need to close above 2069.16/2070.

The first try at Daily 20EMA is a BTFD setup

Even if bears manage to reverse next week or within these two weeks; daily bulls have a first try BTFD setup at daily 20EMA setup just like how first try hourly 20EMA was a BTFD setup during Friday’s day session. We count this rally from the 1861 vs 1861.5 hourly bottom to 2065 as Leg 1. The bounce has never had to retest the daily 20EMA yet, but retested the daily 8EMA 3 times and bounced off it. This means it has been a massive bull squeeze run that the very first dip to 20EMA should sticksave. However, just because first try BTFD at daily 20EMA is a great setup ,it does not mean it has to be a daily chart scale bounce (50-100 points). It could just be an intraday 20-30 points bounce then retest the daily 20EMA again if bears manage to have that much conviction.

Our Swing Position

Nothing has changed from Thursday’s update.

However, the IWM Dec ITM Calls will get stopped out if IWM trades below 113.90.