Be advised that all my comments are my OPINION and that OPINION is based on my long term in-house model that I dubbed LAWG 647. The prices I use in my model are week ending prices, usually Friday. BTW, trading commodities is risky and not meant for those that faint at the sight of blood.
October 7, 2020
HOW LONG CAN THE E-MINI S&P HOLD ON TO THE UPTREND?
According to the LAWG647 Model the December E-Mini S&P’s have been in a protracted uptrend since
May 29. Since that trend turning Friday to September 3 the December E-Mini S&P’s rallied over 598 points. On Friday, August 28 the Model indicated that December E-Mini S&P was at the Third Standard Deviation above the long term average suggesting one may wish to look at a short term counter trend sale. It is important to understand when the Model suggests such a trade does not mean the trend has or will turn, only that there is a likelihood of a short term price correction.
From the 3rd of September to September 24th the market dropped over 378 points, but has remained in a long term uptrend according to the Model. Since the September 24 the December E-mini S&P’s have bounced back over 220 points, and as of last Friday continues in an uptrend……. but could this be the last Huzzah? What does the Model tell us now?
December E-Mini S&P’s are in an uptrend. Both the Positive and Negative Indicators are within the First Standard Deviation of the long term average suggesting the trade is pretty balanced favoring neither direction. We know according to the Model that we need a close this Friday, October 9 at or below 3253 to turn bearish, and as of this writing the market is trading at 3394, yes I know not close. What caught my interest are the critical price levels in the following weeks which are shown below.
This Friday October 9, 3253
October 16, 3334
October 23, 3351
October 30, 3382
As you can see without a significant rally the critical reversal points are getting closer each passing week to present levels. What to do? First of all given the political games being played out of Washington I would be careful as any unexpected announcement can throw the market in to a short term hot mess. With caution the word of the moment I will suggest looking for dips to buy, using stops as protection against political maneuvering. I have the values listed above as a guide as to how safe or precarious the December E-Mini S&P uptrend may become.
f you are interested in our trading ideas you can go to our website and checkout Trades of the Week.
Lee Gaus is a founding partner of EFG Group founded in 1992 which specializes in servicing Introducing Brokers. Prior to founding EFG Group Lee Gaus, Tom Fritz and Steve Erdman all began their Commodity Futures careers with ADM. Collectively Lee, Tom and Steve have over one hundred years of experience in the industry.
International Futures Group (IFG) founded in 1994 is a sister company to EFG Group specializes in serving institutions, professional traders and individual investors.
We believe our experience and the development of the Model provide our clients, Introducing Brokers and individual clients a unique perspective. If commodity trading is what you do drop me a line atLee@efggrp.comor give me a call at 312-384-1166, or 1-877-304-1369. We will be glad you called and are confident so will you.
The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.