Taking advantage of E-mini S&P highs

 

 

Same story as the two charts above in the E-Mini S&P on the monthly below. The path to the "SUPER-TREND" up is just a little different. The cross of the 9-period SMA up and over the 20-period SMA occurred back in January of 2010 and since then the market went below the 9-period SMA several times and even below the 20-period SMA for 3 months in a row.

However, for the most part the E-Mini S&P went from being in a "SUPER-TREND" up to occasionally being in just an upward trend. An upward trend is still pretty darn good if you are a bull when the market holds at the support of the 20-period SMA.

In the end, the monthly ES chart is in a "SUPER-TREND" up just like the weekly ES and the daily ES.

OPTION PLAY: Since, I am usually a trend trader and in this case I am trying to pick a top I will structure strategies that will hold up if the stock market crashes or if the trend up continues.

In this "options play" I will focus on the fact that this stock market rally has to end at some point and that there are ways with put options on the E-Mini S&P futures or the E-mini Dow futures to participate in a stock market crash if and when it happens.

While record highs have been dominating the headlines, these highs can’t last, so you have to find a way to be a part of the sell-off when, and if, it occurs.

By nature, I am not a top- or bottom-picker, but I can structure some strategies that my clients can benefit from if the "SUPER-TREND" up continues, or if the market crashes.

Here’s a focus on 3 different time frames in the E-mini S&P: daily, weekly and monthly.

 

Daily ES chart

I have added some of my favorite technical indicators to these daily, weekly, and monthly charts below. They are the 9-, 20- and 50-day simple moving averages (SMA), the Bollinger Bands (light blue shaded area), Candlesticks (red and green bars), Bollinger Band Width (bottom chart), and finally Volume (middle chart).

I happen to like these indicators because they can literally tell me dozens of important things and they can do this on any timeframe and any market.

These indicators all tell me the same thing about each time frame: that all three are in what I refer to as a "SUPER-TREND" up. This occurs when the 9-period SMA (red line) crosses up and over the 20-day SMA (green line) as both SMA's point higher on fairly sharp angles and the market itself trades and holds above the 9-period SMA.

I've got this on all 3 time frames simultaneously for the first time that I can ever remember in any market since I have been using these indicators. That's right—the daily, weekly and monthly E-Mini S&P futures charts are all in a "SUPER-TREND" up!

 

Weekly chart

Same indicators as above, same result; the indicators determine that the weekly E-Mini S&P chart is in a "SUPER-TREND" up. The 9-period SMA (red line) crossed up and over the 20-period SMA (green line) during the week of January 14. While at one time or another the 9-day SMA didn't hold as support, the 20-period SMA did so. Therefore, on occasion the market went from a "SUPER-TREND" up to an upward trend. However, now we are above the 9-period SMA and we just made another new high!

 

 

 

 MONTHLY ES FUTURES CHARTS

 Same story as the two charts above in the E-Mini S&P on the monthly below. The path to the "SUPER-TREND" up is just a little different. The cross of the 9-period SMA up and over the 20-period SMA occurred back in January of 2010 and since then the market went below the 9-period SMA several times and even below the 20-period SMA for 3 months in a row.

However, for the most part the E-Mini S&P went from being in a "SUPER-TREND" up to occasionally being in just an upward trend. An upward trend is still pretty darn good if you are a bull when the market holds at the support of the 20-period SMA.

In the end, the monthly ES chart is in a "SUPER-TREND" up just like the weekly ES and the daily ES.

 

 OPTION PLAY:

Since, I am usually a trend trader and in this case I am trying to pick a top I will structure strategies that will hold up if the stock market crashes or if the trend up continues. For lots of past "option plays" check out http://www.mmckinneyfutures.com/ .

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About the Author
Matt McKinney

Matt McKinney is a full-service options broker at Zaner Group both buying and selling energies, metals, grains, softs, currencies and the 30-year bond market. My strategies include time frames of 45-120 days with the ability to liquidate at any time. I can be reached at mmckinney@zaner.com.

Whether you're a novice trader who wants to participate in options on futures or an experienced trader, you can also check out my blog at http://www.mmckinneyfutures.com/.

Futures and options trading involves substantial risk and is not for everyone.

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