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Day trading the SP 500 e-mini

Outlook for the week of Mar. 19

Introduction

Last week we had a quadruple witching option expiration week. Both the Dow Jones Industrial Average and S&P 500 posted their lowest weekly closes since the week of November 13, 2006.  While the long-term uptrend remains bullish, the medium- term has been threatened by the current price moves. The S&P 500 cash had 97.50 points down, only bounced up 46 points, and still couldn’t close above its breakeven point at 1412.77. This indicates we may see more downside movement in coming weeks.

Should we think the Bear market has started? My answer is NOT YET.  We haven’t seen a long term selling signal yet. Also in the past 4 years, 20/40 weekly moving average lines supported price quite well in every correction during the bull market. So far current downside move still could be another correction in the bull market.

SPX WEEKLY
Stock Charts

 

1. Friday prices – ESM7

Open

High

Low

Closing

1407.00

1409.75

1395.25

1399.00

2. Major support and resistance for Monday Mar. 5

Resistance

1425.75

1429.75

1432.25

1436.75

1442.25

Support

1409.75

1405.50

1400.50

1395.75

1393.25

3. Weekly outlook

The futures contract ESM7 weekly chart shows we could have seen the low of the first leg down last Wednesday. ES could bounce up as high as the 1421-25 range before it starts to move down again.  But as long as price remains below 1421-25 range, we expect ES to go down further to retest its last year breakout level around 1333-1331 in the following weeks. 

Major weekly resistance level is 1425 and support level is 1375.

Weekly chart – ESM7

Stock Charts


4. Daily outlook for Monday.

Option expiration day passed. This week we have a FOMC announcement. Last Wednesday we saw a sharp down followed by sharp up. We may see price moves down to retest last week’s low area today or tomorrow. But a higher low should be expected. Daily price needs to remain within a triangle pattern.

Any breakdown 1368.50 level will create a panic selling.

Daily chart – ESM7

Stock Charts

5. Trading strategy for Monday, Mar. 19

On 60min chart, ES formed a broad triangle pattern. We are looking for lower highs and higher lows to complete that triangle pattern in the coming days. We should expect to retest last Friday’s high and low.

 

Intraday swing position entry on short side:
1412.75 (scalping), 1414.75 (agg) and 1419.75-1421.25(cons)
Intraday swing position entry on long side:
1390.75 (scalping) 1386.25 (agg) and 1379.25-81.50 (cons)

 

Intraday chart ESM7:

Stock Charts

7. Results last week

Weekly summary: calls for w/o Mar. 12/07

Type

Number

Outcome (points)

scalping calls

34

90.00

position swing calls

3

15.75

method calls

4

51.25

What does this mean? See this explanation

To see the trading plan for Tuesday, Mar. 20, contact