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Home / Futures Blog / Employment Day Trade in eMini S&P Futures

Employment Day Trade in eMini S&P Futures

February 5, 2016 by Scott Hoffman

The session before a big data day (like today’s employment report) often sees consolidative and directionless trade. This often resolves itself in a strong directional move after the data release. This move can be a good trade opportunity.

In last night’s Swing Trader’s Insight I labeled the stock index futures as “breakout mode” for today. Thursday’s doji bar and range contraction meant a large move in one direction was likely today. As the monthly employment report was released today, the setup and the market’s resulting action made sense.

ESH daily Feb 5

By the Taylor Trading Technique we would normally be looking for a Sell Short day on Friday- a TTT Buy day on Wednesday and a Sell day on Thursday would be followed by a Sell Short day for Friday. However, because of both today’s employment report and Thursday’s pattern (on a Sell Short day we would look for a test of the previous day high), a breakout trade was more likely.

For the stock indices I generally don’t trade before the 8:30 open. I’ve found this can help avoid whipsaw moves; it also gives us additional time to watch the market. This can be especially helpful on days like today when markets can be volatile and difficult to trade. The eMinis showed this today, as the March  S&P made a low of 1895.50 after the employment report only to rally up to 1910.75 about 40 minutes later.

ESH intraday Feb 5

The post NFP low gave us a reference price for our breakout trade, as I noted in the morning Swing Trader’s Insight watch list: “Watch the 1900 area as a pivot point this morning with the session low (1895.50) as the first downside reference price; the session open (1905.25) as the first upside level.”

The 8:30 open for the March eMini S&P was 1904.00. About 15 minutes later it dropped below the premarket low, giving our first sell signal.  The rebound stopped at the 1900.00 pivot point and then turned back down, triggering our second sale about 20 minutes later as it continued below the Thursday low- the standard downside breakout level.

The midmorning low was 1874.00 and the market drifted higher through the morning. However, the lack of a vigorous recovery rally meant it was likely to push lower in the afternoon, a pattern often seen on breakout trade days. This occurs because as it gets later in the session, the more likely it is that traders on the wrong side of the market (or traders looking to play the momentum) recognize the trend and push the market farther in the dominant direction. (After I grabbed the charts, the ESH made a low of 1865.75, two ticks above the week’s low. Will that hold?)

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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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