Index Futures End of year rally – Can Santa pull it off?

We are now moving to the March 2017 contract on the US index futures. We are also in the last few weeks of the year, a time where we often get a pop in the market up to the Christmas holiday period. Then the volume typically drops and we have an extremely low participation period through to the second week of January.

Our old levels for the December contract were here: 2184, 2134.75, 2104, 2089.25, 2084, 2006, 1950.75, 1904, 1817.75, 1788.75

To adjust for the new contract we drop these by 5.25 and end up with: 2178.75, 2129.50 , 2099.75, 2084, 2078.75, 2000.75,  1945.5,1898.75,1812.5,1783.5

Index Futures – Daily Charts

On the daily chart that looks about right…

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In terms of the bigger picture, we finally broke above the highs towards the end of November but then we spent almost 2 weeks moving sideways. It was only when we came back to test the old highs and they held, that traders got the confidence to really participate to the upside.

Index Futures – Zooming in

index futures

 

This is much clearer on the shorter term chart. This is pretty common on the index futures. We break out but in the absence of solid macro economic news (like an interest rate cut), traders are a little shy about joining the break. The test shows us that the market can hold these prices and so it gives people confidence to get on board.  From here we may move up or we could well test the 2208.50 area (yellow line) before driving up again. To the downside, I’d be very nervous holding a long position of the market holds below 2208.50.

Index Futures – Weekly Profile

Index Futures - weekly

We have 3 distributions on this weeks profile. Looking at this, we can see not much has traded from 2230 down to 2210. If we do slip below 2230, then we could make it back to 2210 very quickly. So today I’ll be looking for the market to hold 2230 and to play the downside if it doesn’t.

Index Futures – Daily

Index Futures Daily Profile

The 2230 area is also quite obvious on the daily profiles, in fact it’s really the only thing going on.

Index Futures Plan

  • Biased upside
  • Pullbacks to 2230 and 2208.50 represent trades where we could get a large amount of upside participation as traders feel that the upside is more sure now there has held.
  • Other than that, looking for “go with” trades to the long side, jumping on long side momentum
  • The market is rolling over and so Friday and Monday may be quite lackluster
  • We don’t have that many potentially big days ahead of us. As we head into the 19th December, we have to be on the lookout for the market slowing down. Looking at the calendar it appears to work well. Friday of that week is the 23rd, so people will (in theory) be working right up to that date.

Weekly Numbers
Range 2173.50-> 2246
Value 2192.50 -> 2234

Daily Numbers
Range 2227.75-> 2231.50 / 2245
Value 2235 -> 2243
Globex 2239.75 -> 2243.50

Settlement – 2242.50

Other levels  – 2230, 2208.50

Key Levels – 2178.75, 2129.50 , 2099.75, 2084, 2078.75, 2000.75,  1945.5,1898.75,1812.5,1783.5

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After suffering a 30% drawdown at the hands of “independent financial advisors”, Peter started trading in the early 2000’s, figuring there was no point in paying people to lose money for him. By 2005, Peter was day trading NASDAQ stocks and later discovered the value order flow. He struggled with the way order flow data was presented so designed tools that organized Order Flow information more rationally and Trading was born. Those tools are now the #1 ranked software on Investimonials.com.
Today Peter spends his time trading and helping other traders through the Jigsaw community, articles and free one on one sessions.

Jigsaw Trading

After suffering a 30% drawdown at the hands of “independent financial advisors”, Peter started trading in the early 2000’s, figuring there was no point in paying people to lose money for him. By 2005, Peter was day trading NASDAQ stocks and later discovered the value order flow. He struggled with the way order flow data was presented so designed tools that organized Order Flow information more rationally and Trading was born. Those tools are now the #1 ranked software on Investimonials.com. Today Peter spends his time trading and helping other traders through the Jigsaw community, articles and free one on one sessions.

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