ES futures bears should get better entry levels
The NASDAQ futures weighed on stocks, but the broad market is marching on.
From a historical perspective, this week is not the time to be a stock market bear. As we've outlined, the market generally likes to move higher into Fed meetings and quarterly futures expiration also tends to put upward pressure on pricing. This is true, at least until the Friday morning Triple Witch. From there, things sometimes turn sour. Thus, the ES bears will likely have better entry points in the coming sessions if they are patient.
We've also heard chatter about a Bradley turn date occurring on the 20th of this month, and others are noting June 26th as a potential reversal date based on moon cycles. We don't normally pay attention to these types of things, but the fact that they coincidentally appear to be in line with the charts make them at least worth noting.
ZB and ZN Futures
The Fed will likely raise rates and stocks will likely grind higher...bonds should retreat.
The financial markets are expecting the Fed to raise overnight borrowing rates by a quarter point this week and we can't imagine a scenario in which they don't. Thus, we could be setting up for a sell the rumor and buy the fact type of trade. We suspect Treasuries will continue to drift lower into the Fed meeting.
We also believe the S&P will likely grind higher into week's end, if so it will be difficult to justify any buying in "risk-off" assets. Nonetheless, should the long bond get into the 151ish area, we'll likely get interested in playing the upside.
Treasury Futures Market Analysis
**Bond Futures Market Consensus:** Bonds and notes will likely go into correction mode. If so, we will be looking for 151'0 in the ZB and about 125'11 in the ZN.
**Technical Support:** ZB : 153'03, 151'25, 151'01, 150'07, and 148'25 ZN: 126'02, 125'11 and 124'08
**Technical Resistance:** ZB: 155'07 and 157'12 ZN: 126'24 and 127'06
ES and NQ Futures
Friday's intraday 30 point slide negated the overbought status. New highs in the ES?
The chaos seen in Friday's session saw the ES quickly tumble 30 points after posting a new all-time high. Although the move was fast and took place in a single trading session (even a single afternoon), it was a legitimate correction. Accordingly, the market is not overbought and the momentum is still higher. We suspect the ES will be looking for new highs in the coming trading sessions.
Those trying to place the downside in this market should be able to withstand a move into the mid-2450s. For smaller traders this might mean holding off establishing a position until such prices are seen. Those trading larger accounts and multiple lots it might want to keep trades at a "nibble" with the intention of getting more aggressive at the noted level. In any case, the path of least resistance is higher in the short-run but we will consider turning bearish near 2455.
Stock Index Futures Market Ideas
**e-mini S&P Futures Market Consensus:**
We like being bears on rallies. Look for resistance near 2249/2455.
**Technical Support:** 2414, 2395, 2365, 2345, 2337, and 2325
**Technical Resistance:** 2445 2455, and 2473
e-mini S&P Futures Day Trading Ideas
**These are counter-trend entry ideas, the more distant the level the more reliable but the less likely to get filled**
ES Day Trade Sell Levels: 2445, 2451, and 2456
ES Day Trade Buy Levels: 2428(minor), 2415, 2403, 2393, and 2386
In other commodity futures and options markets....
March 9 - Buy July soybean $11.80 call for 7 cents or $350. This represents the total risk of the trade prior to transaction costs.
March 22 - Sell June Live Cattle 120 calls near 100/110.
April 27 - Buy back the June 120 cattle call and replace it with a June 123/115 strangle and an extra August 123 call near a credit of 1.10 ($440).
May 2 - Roll the August live cattle 123 call into 126/115 strangles for close to even money.
May 3 - Roll June live cattle 123 calls into double the quantity of August 129/112 strangles for close to even money. This spreads risk to both side of
the market and slows things down.
May 5 - Buy August e-mini S&P 2000 puts for 5.75 ($287.50).
May 12 - Go long the September ZN futures contract near 124'20 and sell a September 124.50 call for about 1'15.
May 18 - Go long the September corn futures contract near $3.75 and sell a 380 call for about 18 cents.
May 30 - Go long an August soybean future near $9.27 and sell a $9.30 call option against it to establish a sharp hedge.
May 31 - Sell July hogs 87 call for about 112.50 ($450).
June 1 - Buy back August live cattle puts with strikes from 110 to 112, then sell 1/3rd less of the 114 puts (we are hoping to scale out of this trade in the coming weeks).
June 12 - Buy back August lean hog 87 call to lock in profit of about $260 before transaction costs.
June 12 - Buy back 1/3rd of the August cattle 129 calls to reduce risk on this sell-off.
(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more. Email us for more information)
DeCarley Trading (a division of Zaner)
Twitter:@ is substantial risk of loss in trading futures and options.** These recommendations are a solicitation for entering into derivatives transactions. All known news and events have already been factored into the price of the underlying derivatives discussed. From time to time persons affiliated with Zaner, or its associated companies, may have positions in recommended and other derivatives. Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction. Seasonal tendencies are a composite of some of the more consistent commodity futures seasonals that have occurred over the past 15 or more years. There are usually underlying, fundamental circumstances that occur annually that tend to cause the futures markets to react in a similar directional manner during a certain calendar year. While seasonal trends may potentially impact supply and demand in certain commodities, seasonal aspects of supply and demand have been factored into futures & options market pricing. Even if a seasonal tendency occurs in the future, it may not result in a profitable transaction as fees and the timing of the entry and liquidation may impact on the results. No representation is being made that any account has in the past, or will in the future, achieve profits using these recommendations. No representation is being made that price patterns will recur in the future.