Since its inception circa 1957, the Standard and Poor’s 500 (S&P 500) has measured the performance of America’s largest companies. During times of boom and bust, investors from around the globe have looked to the S&P 500 for clues on the state of American prosperity.
For active traders, E-mini S&P 500 futures are an ideal way of engaging the S&P 500. Featuring enhanced leverage, consistent volatility, and robust market depth, the E-mini S&Ps are a welcomed addition to any trader’s arsenal.
Is the Trump Rally Over?
Beginning with Donald J. Trump’s victory in the 2016 presidential election, U.S. equities have been a historic bull run that has been labeled the “Trump Rally.” Values of the S&P 500 have gained more than 50 percent since Election Day 2016. The long-term uptrend has been a beautiful thing for buy-and-hold investors as well as E-mini S&P 500 futures bidders.
But can the Trump Rally withstand the political uncertainty of 2020? This is truly the trillion-dollar question and one that is on the minds of institutional and retail traders alike. Below is a quick synopsis of bullish and bearish perspectives on the U.S. equities market:
- Bullish: Equities bulls suggest that low interest rates and optimism surrounding U.S./China trade relations will supersede election uncertainty. Accordingly, the business-friendly environment will drive the U.S. indices higher.
- Bearish: Market skeptics cite slower global economic growth as the primary catalyst for a U.S. recession. In addition, many predict a hawkish shift in FED policy toward Q3 2020, possibly ushering in a 10 percent equities market correction.
As you can see, there is a tremendous amount of guesswork involved in the above prognostications. Fortunately, traders of E-mini S&P 500 futures don’t have to be correct on their market calls; all they need to do is periodically get on the right side of the action.
Trading the 2020 Presidential Election
In order to generate profits when trading financial instruments, two things are needed: volatility and liquidity. Fortunately for active E-mini S&P 500 futures traders, each facet will be a regular aspect of 2020’s market dynamic.
Given the popularity of the S&P 500 index, traded volumes of E-mini S&P futures are typically strong. In fact, for 2019, the E-mini S&P 500 posted an average daily volume in the neighborhood of 1 million contracts. The heavy volumes promote a strong depth of market, tight spreads, and minimal fill slippage.
Over the course of the 2020 election, there will be times when participation in the S&P 500 is hyperactive and pricing is volatile. Below are a few noteworthy red-letter days:
|Super Tuesday (Primary)||March 3||Democratic Front-Runner|
|Democratic National Convention||July 13-16||Democratic Presidential Nominee|
|Republican National Convention||August 24-27||Republican Presidential Nominee|
|Presidential Debate #1||September 29||Campaign Rhetoric|
|Presidential Debate #2||October 15||October Surprise?|
|Presidential Debate #3||October 22||October Surprise?|
|Election Day||November 3||New POTUS Selected|
Though it is not guaranteed, stock market volatility is possible around each of these events. Should any sudden revelations in terms of candidacies, rhetoric, or election results arise, volatility may spike in U.S. equities. During such periods, E-mini S&P 500 futures will very likely exhibit wide daily ranges and rapid swings in pricing.
Want to Learn More About E-mini S&P 500 Futures?
The U.S. Presidential Election of 2020 will be a fundamental market driver, but it isn’t the only one. Coronavirus fears, U.S./China trade, and various elections in the Senate could also shake up valuations. For active futures traders, 2020 is sure to bring an abundance of opportunities.
To learn more about how you can capitalize on current events, check out Daniels Trading’s online portal for trading advice. Featuring insights from professional DT brokers and third-party educators, it is a valuable asset for those attempting to navigate election year chaos.