S&P 500: Trade call, long call spread

Here’s a trade idea to test out: Long the S&P futures via a 2665/2770 strikes Long Call Spread with Friday expiration.

My rationale for this is that the two-hour chart shows a narrow range for two days, which seems to be setting up for a breakout. Some chartists will add that the 40-point width/height of the range to the current high point is at 2660 to yield a target of 2700. This even number is also the halfway area of the compressed Bollinger Bands.

If you want to see a potential raging bull inside a caged, narrow range, see the market internals from 12:00 p.m. Central until 12:30 p.m. Central. Also, notice the gap ups in price in the one-minute chart in TICK and TICK/Q, which are price pass-throughs where levels are skipped entirely; VX or the VIX one-minute chart’s cascade down move closing on its lows and holding them; and, finally, my projected range for the week showing 2698 for a low, high-of-the-week target.

The 12:15, :23, and :38 1-min S&P 500 futures candles had volume spikes on the way up, and some momentum studies in the two-hour and four-hour time frames support some higher pricing possibilities. No breakout or news-induced rally is guaranteed nor any advice rendered. One of my childhood violin teachers said “if you’re going to make a mistake, make it a big one, and hold your violin up, play the music with confidence.”

So, seek a professional for specific professional advice in case my anticipation of a rally is wrong.  

About the Author

Trevor Smith is a registered commodity trading advisor who holds four degrees across multiple disciplines. His study of financial markets led to his beliefs that investors can be self-directed and that market moves could be predicted using a variety of technical indicators and mathematics.