Oil and Commodity Prices
Relentlessly rising oil and commodity prices could be giving nightmares to Fed chair Powell. The wild card in the current market scenario is the upcoming FOMC rate decision, which also might be already pricing in the worst case scenario. As we first wrote in our trading plans yesterday, Mon 03/07/22, barring any surprises, markets could be setting up for a sudden and violent move up, in the coming week or two.
Positional Trading Models: As per our trading plans published yesterday morning, our positional trading models took a short at 10:00am at an entry price of 4283.57 and a trailing stop of 35 points. As we clearly wrote in those trading plans, “These levels continue to be in force into the overnight markets, hence these model trades are to be used only with instruments that trade overnight (e.g., ES futures)”.
Overnight, the futures hit a low of 4138.75 and then rose more than 35 points, thus tripping our trailing stop at 4173.75 on the futures level – closing the short at a cash equivalent price of 4178.75 (after adding a 5-point spread from futures to the cash; the futures-to-cash spread at 4pm yesterday was near 4 points) and a gain of 104.82 points. Positional models are currently flat and indicate no trading plans for today’s session.
Intraday/Aggressive Models indicate the trading plans below for today:
Trading Plans for TUE 03/08:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 4237, 4220, 4200, or 4173 with an 8-point trailing stop, and going short on a break below 4233, 4215, 4197, or 4170 with a 9-point trailing stop.
Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 09:41 am EST or later.
By definition the intraday models do not hold any positions overnight – the models exit any open position at the open of the last bar (3:59pm bar or 4:00pm bar, depending on your platform’s bar timing convention).
To avoid getting whipsawed, use at least a 1-minute closing or a higher time frame – depending on your risk tolerance and trading style – to determine the signals.
IMPORTANT RISK DISCLOSURES AND NOTICES – READ CAREFULLY:
(i) This article contains personal opinions of the author and is NOT representative of any organization(s) he may be affiliated with. This article is solely intended for informational and educational purposes only. It is NOT any specific advice or recommendation or solicitation to purchase or sell or cause any transaction in any specific investment instruments at any specific price levels, but it is a generic analysis of the instruments mentioned.
(ii) Do NOT make your financial investment or trading decisions based on this article; anyone doing so shall do so solely at their own risk. The author will NOT be responsible for any losses or loss of potential gains arising from any investments/trades made based on the opinions, forecasts or other information contained in this article.
(iii) Risk Warning: Investing, trading in S&P 500 Index – spot, futures, or options or in any other synthetic form – or its component stocks carries inherent risk of loss. Trading in leveraged instruments such as futures carries much higher risk of significant losses and you may lose more than you invested in them. Carefully consider your individual financial situation and investment objectives before investing in any financial instruments. If you are not a professional trader, consult a professional investment advisor before making your investment decisions.
(iv) Past performance: This article may contain references to past performance of hypothetical trades or past forecasts, which should NOT be taken as any representation or promise or guarantee of potential future profits. Past performance is not indicative of future performance.
(v) The author makes no representations whatsoever and assumes no responsibility as to the suitability, accuracy, completeness or validity of the information or the forecasts provided.
(vi) All opinions expressed herein are subject to change at any time, without any notice to anyone.
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