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Home / Futures Blog / Today’s Sell Short Day / Breakout Setup Combination for the eMini Russell Futures

Today’s Sell Short Day / Breakout Setup Combination for the eMini Russell Futures

September 9, 2014 by Scott Hoffman

The stock index futures had interesting setups for today. It was the second bullish session, so the Taylor Trading Technique would suggest a Sell Short day for Tuesday. They also had NR4 days on Monday, which told us to anticipate a breakout move for Tuesday.

In this morning’s Swing Trader’s Insight watch list I commented that overnight the eMini Russell futures had made the textbook pattern for a Sell Short day (failed rally above the previous day high) so we should be interested in trading a downside breakout, which would give more confirmation of the Sell Short day move.

Our standard reference prices for a breakout move are the high and low of the previous session. For the Russell futures this would be 1164.20 on the downside. However, because we already had some confirmation of a downside move (the high violation setup) we could potentially look for an earlier (higher) short entry.  As we often like to do, we could look at the overnight low of 1169.20 for our early entry short sale level. (Overnight highs and lows often make for good reference prices for trades in the day session for stock index and grain futures.)

Around 8 AM it broke the overnight low but then managed to regain it at the 8:30 AM stock market open. The subsequent move back below it was the trigger for our initial short sale. The initial stop loss could go above the 7:35 AM high of 1172.90.

By 9 AM it fell to a session low of 1160.10. Here you could either take a quick profit or stay short in anticipation that bearish momentum would push it down to make lower lows. An intraday double top (1166.30 at 10:15 and then 1166.20 at 12:50 PM) encouraged another selloff, reaching an objective of 1157.60 (Friday’s low) shortly after 2 PM.

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Risk Disclosure

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.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

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 third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

Filed Under: Swing Trader's Insight

About Scott Hoffman

Scott graduated from the University of Chicago in 1986 with a degree in Economics. After graduation, Scott worked on the floor of the Chicago Mercantile Exchange then moved upstairs, serving as the personal broker to a former chairman of the Chicago Board of Trade. There, he worked as a broker and margin manager, starting up the firm’s full service brokerage division.

Today, Scott serves as an educator and mentor for new traders, and as a trading partner and ally for experienced traders. The breadth and depth of Scott’s knowledge make him the “go to guy” for both retail and institutional traders.

Scott also publishes two futures advisories, Swing Trader’s Insight and Trade or Fade. He also writes the futures trading blog at www.futuresinsightblog.com. Scott has written articles for a number of futures publications and has done numerous futures trading seminars, including seminars for both the CBOT and CME.

Scott offers his customers the knowledge he has gained from his more than 25 years of experience in the futures business. Scott is accepting new clients at this time.

Scott lives in suburban Chicago with his wife and three children. In his free time he enjoys coaching his children’s sports and various other athletic activities.

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Risk Disclosure

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.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

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 third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

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