Day-Trading the trend in the E-Mini S&P
Last week the March 2012 E-Mini S&P opened at 1307.50 and closed the week at 1312.50. That is 37.75 points higher than the January 3 open of 1274.75.
DO YOU WANT TO BE A MORE PROFITABLE DAYTRADER, SWING TRADER, POSITION TRADER, OR OPTIONS TRADER. GET YOUR COPY OF MY NEW E-BOOK "WHAT LIES BENEATH ALL TRENDS". LEARN SOMETHING VERY FEW EVER LEARN ABOUT THE MARKETS.
Looking at the 5-minute chart below you can see that if you were trading since 2AM this morning there were three very nice intra-day technical trade signals. You can see the short technical signal between 2-3AM, another short technical signal 5-minutes after 6AM, and the first long technical signal came in between 9AM-10AM. You can see that this methodology when used correctly can be very profitable. It has been said that if you trade less you will make more. Keep in mind that this takes extreme patience and discipline, something day-traders usually were never trained to develop. Please feel free to back test this all you want.
On the daily chart below you can see the technical trade signal on December 22. Currently ADX at 44 shows a strong trend with 1320 an area we would want to see a break over to confirm the trend will continue. As of today MACD has dropped all divergence and is now crossing below the signal line and Stochastics are correcting from overbought territory. Today's weakness in the market is being caused by the uncertainty once again in Europe. Take a look at the 5-minute chart again to see the early 9AM low at 1296. You can see the market is up from there.
So go ahead and back test the above methodology. I think you will be pleasantly surprised, if of course, you have the patience and discipline.
To see my market views daily you can follow me on Twitter at http://twitter.com/TrendsinFutures
Fundamental
The S&P 500 index strengthened further to a 6-month high after the Fed extended its forecast for keeping interest rates at record lows until at least late 2014 as Fed Chairman Bernanke said the Fed aims to support a "stronger" recovery. Other bullish factors include (1) optimism Greece and its creditors will resolve their differences in debt-swap talks aimed at reducing Greece's debt burden, (2) reduced concern the European debt crisis will curb global growth after ECB Executive Board member Gonzalez-Paramo said there are "good signs" in the markets that suggest the slowdown in the real economy is "just temporary," and (3) a solid start to Q4 earnings season as 68% of the 146 companies in the S&P 500 that have reported earnings results since Jan 9 have beaten per-share earnings estimates. Bearish factors include (1) the unexpected decline in Dec U.S. new home sales (-2.2% to 307,000), which left 2011 as the worst year on record for U.S. home sales as builders sold just 302,000 homes, down -6.2% y/y and the worst year for the industry since records began in 1963 and (2) the Fed's cut in its 2012 U.S. growth forecast to 2.2-2.7% from a Nov forecast of 2.5-2.9%.
Fundamental Outlook-Bullish-Stock prices remain bullish on optimism the U.S. economy will withstand the negative effects of the European debt crisis, the Fed's extension of its outlook for low rates until late 2014, and decent Q4 earnings. Threats to stock prices continue to include the European debt crisis, a slowdown in China's growth, and Europe's impending embargo on Iranian oil. Other supportive factors include strong earnings, low interest rates, and reasonable valuation levels with the low forward P/E of 12.6 (vs the 5-yr avg of 14.9 and 10- yr avg of 16.7).
