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.
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.
The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.
Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.