In last night’s Swing Trader’s Insight advisory, the stock index futures were labeled as a Taylor Trading Sell Short day, and we saw a good selloff last night. However, Mondays often behave differently than the other four trading sessions of the week (as I’ve noted previously) and today we got a very different trade opportunity.
The eMini NASDAQ futures saw a breakout rally on Friday, rallying out of Thursday’s narrow range day. We normally look for a Taylor Trading Sell Short day in the following session, as the market moves lower in reaction to the “overbought” or “excess high” (to use the Market Profile term) that was created by the previous day rally.
However, Sunday night and Monday often end up behaving as two separate trading sessions (I’ve written about this on other occasions, most recently in my blog post HERE.) so we could potentially look for a trade in either direction today, and the price action would tell us which side to trade.
The stock index futures traded lower last night, as we would expect on a Taylor Trading Short day. The eMini NASDAQ futures moved to a session low of 5318.00, a drop of about 70.00 ($1400) from the Friday close and just above last week’s low of 5315.
It recovered into the morning, and opened the day session at 5330.75. It then sold off, making a new session low of 5317.25 around 8:40 AM. Had the market continued to move lower, we could have been looking at a major selloff.
As it turned out, this low turned out to be a fake out, and prices promptly turned higher (This “low penetration” is a buy signal for the Taylor Trading method.). This reversal was the first buy signal for the morning, and a strong rally took hold.
If you missed the first buy signal but wanted to take a long position, the standard Taylor Trading Buy day entry level was the Friday low of 5347.50, which was hit around 9:15. The rally continued over the morning, reaching a Fibonacci retracement target of 5378 (a 50% retracement of last week’s selloff) late morning.
Treating the overnight session (especially Sunday nights) as a discrete trading session can help you view and analyze the market in a different way. In doing so, you can often better anticipate and trade, especially when markets are volatile. (There were similar moves in the other indices although in the case of the ES the overnight low wasn’t taken out in the morning.)
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.
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 TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.
GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.