U.S. Indices On Fire-Pullback Buys For The E-mini S&P 500
Shain Vernier • 2 min read
It is becoming redundant, but U.S. equities are the story of 2017. Today has brought more buyers to the table, forcing bull runs in both the DJIA and the S&P 500. The opening 120 minutes of the U.S. cash markets has been full of fireworks with the DJIA up over 150 points and the S&P 500 rallying over 15.
This is an interesting phenomenon with the Thanksgiving holiday coming up in a few days. If we do not see some profit-taking by tomorrow’s close, there will be many investors taking a true risk-on approach to the U.S. indices.
E-mini S&P 500 Futures
In the U.S., the E-mini S&P 500 futures contract is a preferred way to trade the S&P 500 via a derivative instrument. The E-minis post tremendous daily volumes and this morning’s session is no exception. For the day, the December E-Mini S&P 500 contract already posting a volume over 550,000.
December E-mini S&P 500 Futures, Daily Chart
The December E-mini S&P 500 has posted a fresh all-time high, blowing through the swing high at 2494.50. On intraday timeframes, this market is in full trend-day up mode. With no topside resistance readily available, my bias has to be towards the long.
From a fundamental standpoint, this rally looks to be a reflection of growing positive sentiment towards Congressional approval of the Trump tax plan. I have talked about this idea in depth, but if passage becomes reality by Christmas, U.S. equities will be in a position to carry this momentum into 2018.
Bottom Line: Trend days can be difficult to trade as many of the best long entries are already gone. For the rest of today’s session, I will be buying pullbacks in the E-mini S&P 500. Entry from the 38% Fibonacci retracement of the daily range, using a 1:1 R/R scalping strategy is a way of taking a few ticks from the action using conservative profit targets (5-10 ticks).
These types of trades can be elusive, so shading price three to five ticks to the bull gives the trade its best chance of being elected. As always, trade smart and for tomorrow!