The S&P e-mini started the month testing the lows of the year around 1,260. In a couple of weeks they quickly rallied about 100 points, then fell off strong from 1,360. This past week has been pretty choppy and volatile due to mixed economic data and people anticipating the supreme court’s ObamaCare ruling. Volatility has been at the highest levels of the year, which is a great sign for short-term day traders.
This week has been particularly nerve racking for Wall Street as we were testing the important support zone of 1,300. As I mentioned in this post on Tuesday, I’ve been expecting price to move sideways in between 1,300 and 1,350. We even saw some big gaps up and down, including today’s 20 point gap up to push us right back into the key resistance level of 1,350.
Another interesting story this month was the CME continuing to show favoratism towards electronic trading, which is threatening old-school pit traders. In this post, I expand on why old-school trading tactics are no longer working in today’s era of high-frequency trading.
The most interesting market over the past couple of months would have to be oil futures. Since the beginning of May, oil’s fallen ~25% from the highs of $106 to the recent lows around $78. Even with the incredible downtrend, you can see massive gaps up and down as this market tanked, which makes this market a little more difficult to swing trade.
Market Of The Month – Oil Futures
Since the oil e-mini has so many intra-day moves up and down, it makes for good day trading opportunities. However, oil can get pretty thin and go choppy without warning, so day traders should be very careful not to over-trade this market or force trades when price is in a choppy channel.
Here’s an example of great movement and setups based on the MAP Trading Strategy. Notice how there’s great mojo behind price, and it’s respecting our areas. Oil tends to get really over-extended when it’s in play, which shows excellent reward-to-risk setups in the right market conditions.
Here’s a live market screenshot where oil is slow and choppy during the lunch hour on a Friday afternoon. In our daily trading classroom we hammer on the importance of staying away from the market when there’s no mojo. People who force trades typically get chopped out of the market.
July Trading Forecast
When the ATR gets up to volatile levels, they typically stay there for 4-6 months. After a very slow Q1, and the election season, I think the volatility is going to continue unless we break into another slow bullish trend into late summer. The first couple of weeks in July will really give us an idea if the markets will move sideways with gaps all over the place, or if we’ll settle into a rhythm. Either way, we will continue to focus on short-term moves in markets like the e-mini S&P 500, Dow, Nasdaq, Russell 2000, Oil, Euro, and Dax.
We’re planning a “trader meetup” in Vancouver mid-July, so be on the lookout for an announcement. The next version of the MAP Trade Signal Software is also in development, and we have some big plans for the last half of 2012.
I’ll leave you with this cool pic from one of our trading trips down to the U.S. Virgin Islands…
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