From the November 01, 2012 issue of Futures Magazine • Subscribe!

Trading stocks with Camarilla pivots

Now consider another example of the same technique using the S&P 500. On Feb. 14, the S&P 500 had the following: Open, 1351.30; high, 1351.30; low, 1340.83; close, 1350.50. Inputting these prices into the formulas, we find that our Camarilla pivot point resistance and support levels are:

  • R1 = 1351.46; R2 = 1352.42; R3 = 1353.38; R4 = 1356.26 
  • S1 = 1349.54; S2 = 1348.58; S3 = 1347.62; S4 = 1344.74

 Thus, the trading strategy for Feb. 15 is:  

  • Buy at 1347.62.  Stop loss: 1344.69; Profit targets: 1351.46, 1352.42, 1353.38 
  • Sell at 1353.38.  Stop loss: 1356.31; Profit targets: 1349.54, 1348.58, 1347.62

On Feb. 15, the S&P 500 opened at 1350.52, which is between S3 and R3. A short trade was triggered, per our plan, at 11:15 a.m. Subsequently, the S&P 500 made a high of 1355.87, below our stop loss. The market reversed lower and all profit targets were hit by 2 p.m. (see “Perfect timing,” below).

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