In last night’s Swing Trader’s Insight I labeled the EMini S&P futures as a Taylor Trading Technique Sell short day. As long time readers know, I suggest we trade the stock index futures during the stock market hours (beginning at 8:30 AM CT) and that we can use overnight highs and lows in lieu of the previous day high and low that the TTT normally uses for the reference price.
Wednesday was the Sell day of the TTT cycle, following Tuesday afternoon’s rally. The TTT told us to anticipate a Sell Short day for Thursday- we might see some early upside follow through, but we would look for any rally to fail, and short the market when we saw it turn down.
For a TTT Sell Short day we normally we would use the previous session high for our reference price, looking for a rally to fail over that level. However with active overnight markets we often see the previous session high or low exceeded in the overnight session, and we can use theses higher highs and lower lows as reference prices for the day session.
In this case, the EMini S&P futures made a session high of 1968.75 around 7:30 AM. The 8:30 AM open was below this level, and the market rallied off the stock market open. Around 9:25 the initial rally stalled against the overnight high, and then proceeded to rally above it about a half hour later. This rally served to shake out the weak shorts from overnight and early morning; the rally then failed and the market turned lower.
At this point we could look to short when the market dropped back below the overnight high- a “high violation” sale in TTT terms. The initial stop loss would go above today’s session high of 1973.50- if the market resumed its rally and took out the high we would know the market wasn’t doing what we anticipated.
EMinis sold off into the early afternoon, reaching the Thursday high around Noon. In this case the previous day high was a poor choice for a Sell Short day reference price, as the market bounced off it twice before finally taking it out late in the session.
Try Swing Trader’s Insight for 14 Days
Swing Trader’s Insight Trial - This swing trading resource is designed to help you improve your trading skills and make you aware of trends and new potential opportunities in the commodities markets. Regardless of your current skill level, access to this exclusive swing trading information will enhance your trading experience.
Swing Trader’s Insight includes access to premium web content.
Swing Trader’s Insight includes an email newsletter subscription.
Swing Trader’s Insight trial lasts 14 days.
Essential Guide for Futures Swing Trading
In this guide, experienced trader and broker Scott Hoffman explains the trading methods he uses to analyze and trade the futures markets and to publish his trade advisory, Swing Trader’s Insight.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.