As I wrote about here, yesterday the eMini S&P futures had a Taylor Trading Technique Sell Short day signal. It ended up moving very little yesterday; the resulting tight range yielded a breakout setup for today. The breakout setup was likely to result in either a selloff if there was residual bearish momentum or as I wrote this morning “If yesterday is the most the bears can muster for a Sell Short day, is the market that strong?”
click to enlarge
The standard breakout price levels were yesterday’s high and low. The first upside breakout entry was taken out at about 3 AM CT. When I got to my trade desk this morning it had reached a session high of 1203.75 and was still well above that level.
On a breakout day we anticipate that the market structure will be of impulsive waves. This means that moves in the direction of the breakout will create a positive feedback loop – a rally will see increased buying momentum the higher it goes.
So to take advantage of the impulsive nature of breakout days I look for price levels that are likely to attract new buying pressure (on an upside breakout). For the eMinis I would look to buy a rally over the previous session high. Just before the stock market open it got to 1203.50. I was just as happy I didn’t get long then in case there was a fake out before the cash market started trading as the stock market opening can often be an inflection point for the futures.
5 minute chart
They finally took out the session high around 9:10 AM, making a series of higher highs and higher lows during the morning. The 9:45 high at 1209.75 wasn’t taken out on the next rally; the second move up occurred just before Noon and led to the session high (so far) at 1213.75. The September double top at 1214.50 is the next objective (and another upside breakout point?)
This is a sample of the analysis from my Swing Trader’s Insight advisory service. For information on STI, and to sign up for a free two week trial, visit here.
The information contained here includes information from sources believed to be reliable and accurate, but no guarantee is made as to accuracy, nor do they purport to be complete. Opinions are subject to change without notice. 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.
