Welcome to our latest episode of The Futures Rundown brought to you by T4 Futures and Options.
With your host Mark Longo and guest John Seguin, Senior Technical Analyst and Educator at Market Taker Mentoring
The Trading Pit
- Looking at what is trading in the futures markets and discussing the latest Fed announcement
Futures 101
- An overview of intraday swing trading
TRANSCRIPT
You’re listening to the Options Insider Radio Network, the home of the Options Podcast.
For more quality options programs, visit theoptionsinsider.com or search for Options Insider Radio Network in your podcast provider of choice.
Listeners can also access all of our programming through our mobile app available on the iTunes and Google Play stores.
Select programs are also available via livestream at mixler.com/options-insider.
That’s mixlr.com/options-insider.
Don’t forget to follow along with your favorite programs and submit your own questions for the hosts at twitter.com/options, stocktwits.com/options, facebook.com/theoptionsinsider, or via questions at theoptionsinsider.com.
The futures markets can be downright scary.
Limit up, limit down.
What the heck is our Bob anyway?
Are they going to dump a truckload of soybeans on your front lawn if you click the wrong button?
Come to think of it, maybe you should just stick to your comfort zone.
Or you can break out of it with the Futures Rundown.
The Futures Rundown is here to help you make sense of these scary markets.
We’ll analyze all the top futures trading activity, explore the ins and outs of your favorite products, explain exactly how futures work, and hear from leading experts in the futures markets.
The Futures Rundown is brought to you by T4 Futures and Options.
Elevate your trading experience with the T4 Futures and Options trading platform.
Whether you prefer desktop or mobile applications, T4 delivers low latency and professional grade functionality for both traders and brokers.
Take advantage of theoretical sheets, strategy solver, MBO, advanced charts, and a suite of powerful features to enhance your trading strategy.
Visit ctsfutures.com or search for T4 Futures and Options on Google to register and get a free month.
And now it’s time to break into the futures markets.
It’s time for the Futures Rundown.
All right everybody, that music means we are back.
It is Wednesday time to roll out the Futures Rundown, see what’s lighten up the world of futures today and indeed this week.
My name of course Mark Longo from the optionsinsider.com as well as from the network upon which all of you folks have been mainlining throughout the week.
Hope you’re having a good trading week because we got a banger in store for you today.
A couple of things to remind you of at the top of the show.
First off it’s a new show, brand spanking new show, only a couple of months old.
So all those ratings and reviews, some of our shows go back 10, 15 plus years.
They have a lot of reviews.
This one’s brand new.
So if you do leave some rating stars, reviews, it does really count and it does help new people continue to discover the show.
So thanks for that.
And of course if you want to go above and beyond, make sure A, you’re listening to the full network can be check out the optionsinsider.com/pro to learn more about our pro Q and A’s options oddities giveaways, fun times, all sorts of good times over there, the optionsinsider.com/pro.
And now it is time to learn who is joining us on the old futures rundown program today.
I’m pleased to welcome back on a repeat offender now, John Segwin, the senior technical analyst and educator over there at Market Taker mentoring what the cool kids call, just chatting with his buddy Dan not that long ago here on the network.
John, welcome back to the futures rundown, sir.
Nice to hear you again, Mark.
All right, John, we got a lot in store for us.
Let’s dive right on into the trading pit.
It’s time to break down all the action that’s lighting up the futures markets this week, what’s limit up and what’s crashing and burning.
Let’s find out.
It’s time to enter the trading pit.
All right, listeners to the trading pit.
We go see what’s lighten up our tape out here in the futures market this week.
It’s been another interesting, another wild week.
I hope you’re hungry listeners pun intended.
Once I start breaking down some of these gainers and losers over here on the week.
But before we get to all that fun, John, what’s been catching your eye in the world?
The future is this week, sir.
Well, it just happened about 20 minutes ago.
You know, we got through a fed, a fed rate cut.
And then for whatever reason, it seems when the fed chair, Paul gets behind the mic and the press conference that follows the FOMC meetings.
He said a few things that just absolutely sparked, I mean, huge, huge hits in the equity markets, even the treasury market, the dollar is on fire going higher.
What he said that sparked all this was that the fed is lowered their amount of rate cuts they’re expected to do next year from four to two.
And he said the worst word he could have that they’re still a little bit worried about inflation.
He’s been talking, the fed has been really focused on employment data and it’s been just fine.
And now all of a sudden, he’s going back and he mentioned inflation not going away that there were only going to be two cuts next year.
And the stock market, which was doing quite well, it might have moved the length of an average week or at least 200 times an average day range in literally 15 minutes.
So we’re still in the middle of this.
And it’s the equity market, the interest rate space or the bond market, what it did to currencies, all these things are connected.
And we are seeing some absolutely massive moves.
It reminds me back in the 80s and 90s when we had employment data that just shook the markets every first Friday of the month.
So this is still playing out.
And it’s pretty scary stuff.
I learned one thing, never trade, interest rate or markets are connected to interest rates when the fed’s involved, particularly when Chairman Powell is speaking.
And this is the reason why.
Yeah, you’re right.
Some pretty wild stuff.
We were just crunching the numbers because we like to wait to the last minute before the show starts to get the most up to date numbers, obviously, for our listeners.
And we we noticed the worm turning pretty aggressively, right, as we were starting to crunch these numbers.
I’m going to cheat a little bit here, listeners.
Usually we start with what’s lighting up our tapes for the week and then we’ll dive into some intraday movers.
But as John mentioned, we had a big event out there today, of course, Powell and company coming out, giving out what pretty much was nearly unanimously priced in over there in the Fed funds, 95 plus percent probability we’re going to get the 25 basis point.
But of course, as we all know, with the Fed, it’s what is set after.
And it seems like they are dialing back expectations for cuts next year.
And that, of course, spooking the markets quite a bit as we’re as we’re looking right now, we’re seeing the S&P off nearly one and a half percent.
Nasdaq closing in on two percent.
Dow off over one percent because Dow’s been losing for quite a while.
And VIX Cash, our old pal VIX Cash, north of 17 again, 17 and a half.
So up nearly two points just today.
So after languishing below 13 for quite a right around 13 for a while and now getting some juice.
And John, again, we usually wait to the end of this part of the segment to talk about the most active for today.
But I could tell something was amiss, John, just when I saw our number one most active future today, because usually, as you mentioned, it’s rates topping our list.
It’s the 10 year note and then the five year.
I know when the E-mini jumps into the number one spot by a country mile, John, something’s afoot out here today.
He just upset so many people that, you know, switching from employment data to inflation data was a huge surprise.
And I just measured it.
So in the last half hour, the S&P or maybe the last hour, the S&P moved about three quarters a little bit more than three quarters of an average week’s range in the last 60 minutes.
So that’s that’s really rare, really rare.
Yeah.
Fed days, they have that ability.
I go back to the old green span days on the floor of the seabag and no Fed imminent.
It was a big deal.
Oh, yeah.
Oh, yeah.
Maybe we are back into that range.
I do also wonder what this means for his tenure going forward or if Paul, if he pretty much just realizes he’s done.
So go out and ablaze the glory.
Yeah.
Wow.
That’s a good.
That’s a really good question because all they’ve been talking about is, you know, inflation’s where we want it.
Employment is healthy, but, you know, it was waning and neither one turned out to be true.
And this is why you’re seeing such a reaction.
If you remember during the pandemic, when they started raising rates, that really weighed heavy on the stock market and all in one, you know, 10 minute period, you know, he wiped out a lot of hard work in the equity markets.
Yeah.
You know, Trump was already agitating on the campaign trail that he wanted more of a seat at the table over there, maybe quite literally putting his his treasury secretary on the on the Fed board.
I don’t think this is going to work well for Paul keeping his job.
But hey, maybe maybe he doesn’t care at this point.
He wants to do what he thinks is right.
Either way, John, we got some stuff lighting up the tape.
Let me just let me just keep going here where I started off listening because today’s price action is quite substantial and also just performance.
Again, you know, something is amiss in the market listeners.
This is very rare.
It could be upside move, but usually when you see the S&P E-mini dominating the futures tape, usually it means it’s a blood red day in the market.
That’s pretty much what we’re seeing out there right now.
Six million.
Yes, I said six million.
You know, if you’ve been listening to this show for a while, you know, I talk about the 10 year five year at the top and usually we’re talking one and a half, two million contracts.
Now it’s an E-minis, a smaller contract, but still six million contracts.
It’s just just lighting up the tape out there right now.
The number two listeners is the 10 year note and it is a distant number to 1.3 million.
So we drop off 4.7 million contracts between number one, number two, by the way, as the March E-mini future and the March 10 year note, number three, the five year note, also March 1 million contracts.
Their number four just shows we usually take the micros out.
We left them in this week just to show how substantial the shakeup is and just the shock to the equity system right now.
Number four listeners, the NASDAQ 100 micro March contract, 871,000.
That is a micro.
Pick that number with a grain of salt.
Number five, the SMP micro, 745,000 equities are inescapable today.
Listeners.
Number six, all the way down to number six now is the two year note, sometimes hanging out at number two, 656,000 contracts.
Again, this is all March all the time at the exception of number 10.
Number seven, we’ve got the ultra 10 year, also a March 447,000.
Then the NASDAQ E-mini, number eight, 447,000 there as well.
So only a few hundred contracts separating them.
Number nine, 30 year T-bond, 320,000.
Number 10, the 30 year Fed funds rate.
That’s the only Jan contract on our board at 281.
If I go beyond a little bit, number 11, crude oil WTI 269, the Feb contract.
And let’s go to 12, the three month SOFR, DS contract, 258,000 there because we did squeeze in a few micros.
John, I’m guessing that doesn’t surprise you given today’s news that the E-mini is just blowing everything else out of the water today, sir.
Not a surprise.
And it’s no surprise that the 10 year note is, I mean, I know volume wise, it’s nowhere near the S&P, but that’s a pretty big day for the 10 year note or for treasury period.
Let’s do a quick rundown of some of the other gainers and losers for the week listeners.
And again, take this in context, obviously today’s price action is shaking up the game quite a bit.
This was coming into earlier this morning before the rate decision.
So obviously not reflective of the just last hour and change worth of action out there post fed.
But I would say let’s start at the dark side first, because why not listeners?
I would say just in general this week, the gainers and losers, I hope you’re hungry.
I’m just going to leave it out there.
You can see why in a second.
Number 10, going out to canola oil first.
So very, very much food related.
It’s going to be pretty much all March all the time with the exception of a few.
I’ll point those out.
Canola oil number 10 off five and a half percent.
Number nine, soybeans again, hope you’re hungry.
You know what?
They routed these in reverse order.
Let’s go the reverse order.
How about that?
Listen, let’s start at the bottom.
Number number 10 here, we’ve got a high grade copper off 2.6 percent.
Number nine, we’ve got hard red wheat off 2.64 percent.
Number eight, going out to FX, the Brazilian real off 2.71 percent.
That is a Jan contract.
Number seven, again, hope you’re hungry.
It’s sugar listeners March contract off 3.05 percent.
Number six, we’ve got rolled aluminum for the Brits out there off 3.09 percent.
Number five, back to the hunger.
It is wheat off three and a quarter percent.
Number four, soybean meal again, very much edible off 3.7 percent.
Number three, you got to be pretty hungry to sink your teeth into gold unless you’re checking the bars.
Feb, of course, off 3.78 percent.
Number two, back to the food processing soybeans off 4.34 percent.
And the number one dark side loser, whatever you want to call it, dark side mover out here this week, is canola oil off 5.53 percent.
And then to the upside we go listeners again, hope you’re hungry.
Let’s do number 10 here.
We’ve got the Nasdaq E-Mini, the March contract.
This was on gainers coming into this morning.
So I’m sure if you re-rack that now, maybe a different story.
Number nine, NatGas, the Jan contract up 1.5 percent.
Number eight, keeping it in energy.
It is heating oil, the Feb contract up 2.01 percent.
Number seven, it’s Bitcoin, the big Bitcoin future.
Decent contract up two and a quarter percent.
Number six, the VIX was up 2.88 percent.
Again, if we re-rack that right now, going to be up more.
That is the Jan future there.
And then number five, all the top five this week.
Again, I hope you’re hungry listeners.
Maybe a little thirsty too.
Number five, class three milk, the Jan contract up 3.59 percent.
Number four, what do you want to put that milk in?
How about some coffee?
The March contract up 3.98 percent.
And you know what you want to have on the side of that coffee?
Maybe a little bit of cash settled cheese, the Jan contract up 4.1 percent.
And then number two, you know you’re having a nice balanced breakfast.
Gotta have some OJ there, number two, up 9.31 percent.
And then maybe at night you’re settling down for the evening.
It’s just a cold winter’s evening.
You want to warm up with a little bit of hot cocoa.
The March contract up 19.06 percent this week.
So a banger week on the food stuffs there.
John, I have one question for you, sir.
Are you hungry this week?
Yeah, I have now after you said all that.
But I’ll tell you what, if you are hungry, wait a little bit because soybeans and I think even corn, a lot of these grains, they’ve been coming down.
So it looks down the road.
Maybe some of that inflation will be stripped away because of this list of the losers today.
You got some good ones on there.
Sugar, wheat, meal, soybean meal, soybeans.
You know, these are the things we need to get those commodity indexes lower.
So this is actually helpful, I believe.
We could sink our teeth pun intended into more of this action from today.
But you know what?
The big turn in today’s market, John, leads us directly to our topic, which we kind of touched on the last time you joined us back in October.
We thought, you know what?
It might be a good topic to save for a future episode.
So we’re going to do that now.
Listen, there’s a little bit of the old Futures 101.
It’s time to shine some light on this mysterious marketplace.
It’s time for Futures 101.
All right, everybody.
Welcome to Futures 101.
Again, today, indicative very much of what we’re going to be talking about now, listeners.
As you recall, a few months ago here on the show, we had a question from Eli 76 and he asked, “Can you please do an episode covering the mechanics of intraday swing trading using futures?
I prefer the E-Mini, but any product would be informative.
Thanks for your time.”
As you recall, this question came in when you joined us last time on the show.
We didn’t really have time to tackle it then.
We thought we would save it for your next appearance and it just happens to work out to be the perfect topic for today, John.
What do you think?
Yeah.
Well, first of all, if you’re going to be trading particularly in that equity side or interest rates or any of the financial products, you better be aware of at least three events.
One, any inflation figure like CPI or PPI and then on Friday, we actually get the Fed’s primary inflation gauge so you can see what damage or help an interest rate event could cause an employment.
There’s the other and of course, what the Fed’s involved.
That’s first things first.
Fundamentals trump any technical read you might have.
I’m generally, when we’re lacking the fundamentals, you have to have some skill with the technicals.
As an intraday swing trader, that’s a tough life.
I tried it for a while and I was a broker so I was always looking at trading fits.
The best thing that I can tell you about intraday– I’ll give you a couple of clues.
One, that first of all, the low or the high for the day is usually made in the first hour of the day, which means when the market extends, it’ll only extend in one direction.
If you see new highs after the first hour, it indicates that the institutional traders are leaning while they’re bullish.
If you see a high made in the first hour and it extends lower, it generally means the high for the day is in and the market is going to continue on that path.
That extension after the first hour often leads to a continuation of the next session as well.
That’s one thing that I look for.
Another thing is I keep track of first hour ranges.
If you’re going to be speculating, you really want to know how much does this market move normally in the first hour and through the whole day.
Those are called average true ranges.
You use average true range.
If you get, let’s say, a quarter of an average true range in one day, there’s a pretty good chance you’re going to have a good move that day.
Therefore, if it extends, you want to go with that.
However, if you see our market move the length of an average day range or three quarters of it in the first hour, it’s pretty much done for the day.
It’ll be tough to make– you won’t see a whole lot of movement after that typically.
Measuring length is very helpful if you’re going to be in there speculating.
As a matter of fact, I think for people that are high frequency traders, are getting in and out three or four times a day, I would look for markets that had above average moves, which allows you to counter trade.
You could sell it and buy it 35, 40 minutes later and make little chunks of money.
If you’re going into something like you’re trying to capture something bigger than just speculating throughout the day, the three things I watch every day to make an assumption or a forecast for the next.
That is, if the low was made in the first hour, the market extended higher, and it closed in the upper quadrant means that it will probably continue on that path.
The logic here is, if I get those three elements, that the market will continue going higher until I see a response from sellers.
What would that response be?
Then I would start to see highs made in the first hour.
That’s how you get the changes.
Also the logic behind that, really watching that first hour trade, is as a broker, I did most of my big orders in the first hour and the last half hour because liquidity was high, volume was peaking.
The big traders, professional traders tend to be very active during those times.
The direction that the market takes, it reveals which way they’re leaning.
This is something I saw in the trading pits and was able to translate it onto a chart.
I use 30-minute charts to organize data.
It gives me a chance to look at a chart and see a trading pit by using an intraday chart.
I refer to daily candlestick charts once in a while.
I have another unique charting system that I use myself, but it tracks time at price or volume.
That’s pretty helpful.
If I see a day where three days in a row is one of my favorite patterns for breakout trades.
Three days in a row with severe overlapping lap and ranges, below average volume.
If I see three days like that and I see that overlap, that’s usually when I make my best money playing for breakout trades.
If I see a market extend after that first hour, I just take that trade.
It’s the pregame setup.
It allows you to make those aggressive vertical bets.
On the other hand, what happened today is going to put us into the opposite of that.
This move today, you move the length of about an average week in really 90 minutes now.
The next phase you’re going to enter is going to be a very choppy, trendless trade, which is also very common as you come into the holidays.
During the holidays with the lack of liquidity, it could be pretty dicey.
Not getting into trades, getting out of them.
Imagine if you were long the S&P today when Paul said what he said and trying to get out of that trade.
It’s nearly impossible.
Again, I cannot stress the importance of being fundamentally aware of when something like this could happen because it can wipe out a trading account.
I don’t mean to scare you, but I’ve seen it happen before.
I’ve seen people get caught behind this.
I myself try to get out of trades when there’s not a bit in sight.
This is a good lesson today for traders.
I believe markets do two things.
They’re either in a congestion phase or coiling up.
I call it the rest or run.
We were in the rest phase with the S&P for a good two weeks.
It wasn’t going anywhere.
Then you move up like it did today.
It’s like pent up energy.
We should be entering a rest phase for the next two, maybe the rest of this week and into next week because of the length of the move, you figure what follows that.
If you like to do neutral option strategies, you’re coming into that environment now.
The vertical moves already occurred.
How do you trade a neutral or a consolidation phase?
Do you sell butterflies and iron condors and things like that or even straddles and strangles?
Here’s my rule that I’m going to use for tomorrow.
For example, the S&P, when it gets oversold like this or any market gets oversold or overbought, I immediately look left on my chart.
If I see an area where the market either accelerated into a trend or left a consolidation phase, when the market comes back to that, that’s when you’re going to be able to start counter-trading this because if you’re going to try and catch it, well, most of this move is probably already done.
This is one of my counter-trading strategy is get overbought or oversold, look left, look for some congestion.
When it hits it, in this case, we’re going to look for the S&P tomorrow.
I’ve got a really good support zone coming in about $6,000 to about $59.75.
What I’m going to be looking for is a low made in the first hour.
In a market extent, that would be an indication that buyers are responding to cheap prices.
Just like markets have continued to go lower until they entice buyers, that’s not happening here.
We’re sitting on the lows of the day, so you got to wait till tomorrow and look for those clues.
Remember, oversold, look left, look for congestion, and that’s where you might see the reversal.
That’s the plan for trading probably for the next two to three days.
The intraday trading, it’s going to be tough.
There’s a lot of fear out there, so it’s going to be pretty jumpy.
No, it definitely is.
You laid out a lot of good stuff there, John.
If today’s not a good warning sign that you should be careful, at the very least, don’t dive into intraday future swing trading without knowing, as John said, the basic event calendar.
Things like the Fed days should definitely be on your radar.
If they’re not, then yeah, swing trading is not for you.
But let’s get into some of that in a little bit more detail, John.
For example, he starts off asking about the E-mini.
I would say this is by far and away the number one product that we get this question about.
It makes the most sense.
People aren’t going to dive in on day one and start swing trading lean hogs.
That’s for the not faint of heart.
They’re going to go in with a product that makes the most intuitive sense to them.
A lot of them already have experience with the S&P 500 through spy or SPX, something like that.
The E-mini isn’t that intimidating to them.
They also understand a little bit more the fundamentals and technicals around equity indices.
So again, I’ve often said if you’re going to do this, this is a good starting point.
What are your thoughts of the E-mini as a starting product and any others you could recommend, John, for our listeners as good beginner intraday swing trading products?
Yeah, a great question.
I know it’s an incredibly liquid contract, but you better have a big account if you’re going to be trading the E-minis.
My honest opinion on this would be if you’re just starting out, I would hit the micros to get my feet wet, to just get used to the movement in these markets.
The micro contracts from the CME group are just that they’re liquid, they’re good, and you’re talking about risking a tenth of what you would if you traded the E-mini.
I like to trade the regular 10-year note, but the S&P, I’ll trade the E-mini on it, but I’m in and out.
I don’t look for a lot of trends on that.
But if I’m just starting out, I would absolutely go to the micros.
And today, when you look at the charts today, you’ll know why.
Just to get an understanding on how indices move in conjunction with what’s happening with interest rates and the US dollar, all these things are connected.
If you’re going to be trading it, get used to how I think interest rates drive markets no matter what, all the financial markets.
You’re going to see inverse where bonds go up and stocks go down right now.
They’re both going down because of this seemingly fundamental shift.
But I would steer you towards the minis, or micros, I’m sorry, if you’re just starting.
That definitely makes sense in terms of product size.
Anything else, or would you suggest they stay within the equity indices to start?
Yeah, I think treasuries.
I think if you could get the 10-year note, and they have micros in the notes too.
But I think they correlate often so much that you can’t really watch one without the other.
I think if you like to trade the foreign exchange, so I don’t trade dollar index, but the euro, which I think is a great contract.
That trade, so what happens with interest rates, let’s say interest rates are rising today, and the US dollar is soaring again.
If interest rates go down, the dollar goes down.
When the dollar goes down, equities tend to like that.
A soft dollar affects the equity market.
So you really want to look at three markets that really have an impact.
If you’re going to trade equities, you want to look at interest rates, you want to look at the US dollar or the euro that moves almost exactly opposite of what the US dollar does.
The euro is a CME product.
The dollar index is an ICE product.
That’s an international commodity exchange.
But the fees are kind of high on that.
The euro, I think, is quite a bit more liquid.
If you want to buy the dollar, then just go sell the euro.
But they all move together.
So you could say, man, I’m seeing the euro rally, which means the dollar is going down, and now I think I can buy at the S&P.
That’s kind of how I look at it.
I write about these markets every day and always aware of the connections between them.
Because one market could– if you’re looking at maybe the yen even, and you’re seeing, boy, the yen is starting to rally because it’s second in line to as impact to the dollar, that might be a clue that I can go ahead and buy equities.
Equities are cheap.
They just got sold off, and now I’m seeing the dollar start to weaken.
This is like, hey, and now I can pull the trigger on a long position.
Watching one market, particularly a financial product– I mean, I suppose you could do it purely technically.
But if you’re really going to be a good trader and you’re going to get in there and fight around with the pros, because we really are on the same field with them, you better be aware of what they know.
And they are really aware of the fundamental connections that are in these markets.
So I guess that’s my best advice.
If you’re going to watch one, you better watch three.
A couple other things to add here.
People might be saying, well, if it’s so wild, why would anyone do it?
I think some of the attractions are obvious.
It’s near dated.
You have no overnight risk.
And also, we’ve talked a lot about margin here on this program in the first few months.
We’ve talked about the difference of intraday versus overnight.
Obviously, cost you more in terms of capital to maintain a position overnight versus doing it intraday.
That’s the way a lot of these brokers tend to market themselves to these intraday rates out there.
So it’s very attractive to get people to dip their toes into future.
So they’re seeing these rates.
They want to take advantage of them.
They’re going to keep it intraday, which is why a lot of people start here.
Listeners, John also mentioned kind of the time frame to be wary of things tend to be wild around the open and around the close.
So if you’re going to be swing trading, obviously bear that in mind.
If you’re just getting started, maybe you want to avoid that time frame if it’s too much for you, unless you have a good set of rules in place that are really helping to drive that for you.
Maybe put it on middle of the day when things aren’t quite so wild just to get a sense for what’s going on out there that you can obviously always expand to some of the wilder, crazier times of the day when you expect to see a little bit more movement.
Also, John mentioned, you know, have some sort of tool set you’re using to drive your levels out here.
It could be technical analysis, could be a mixture of both and fundamental.
John, I’d like your thoughts on that.
You mentioned some of the what you use out there.
And I found for my own purposes, I’ve always said on the network many times, I’ve never been a big technical guy.
And one of the reasons for that is I had a lot of that beaten out of me back on the floor of the SIBO, whether it was looking for levels to gamma scalp futures in the S&P.
So looking looking for technicals that really worked from an intraday gamma scalp perspective there or trying to do that then when I moved out into the equities, big equities like Intel doing similar analysis, trying to find levels to gamma scalp intraday.
I didn’t find a lot that really worked for me on the intraday level.
So obviously, if someone’s going to do this, John, they need to find something that they rely on.
So you think you have a few indicators that you’ve really been able to rely on over the years to drive your intraday swing trading, John?
Yeah, I have kind of a unique style.
I mean, I kind of built it on my own.
It’s a compilation of a number of different disciplines.
In particular, market profile is something I learned back in the middle to late 80s.
I read a book and it pretty much changed me.
It’s really about watching markets or trading markets using logic instead of like these just indicators that could be kind of random, right?
So the question is, really, what do markets do?
Well, they run or they rest, right?
So what phase am I in?
Because when it’s resting, it’s likely to get going and start moving.
Well, where does that begin?
How do you know when a market’s ready to get up and go?
Well, I mean, I know in the charts that most people have, they can see flag formations or pennant formations.
I have the ability to track volume at price.
So when I see a market that’s spent an abnormal amount of time at price, meaning the horizontal measurement, then I know that the odds every day are increasing that I’m going to see a big vertical move.
And if you look at what happened to the S&P over the past two weeks, this thing had– it’s like gunpowder.
It had so much pent-up energy.
The Tenure Note did too.
The markets were stagnant, waiting, waiting.
And you see these explosive moves from congestion, right?
And so I learned that really being able to see patterns that take a channel– I think it’s a really good idea to go and try and see if you can find flag formations or pennant formations or rectangles and triangles.
That’s organizing data into a structure.
When it leaves that structure, it usually goes there quickly.
And when markets start to run like that from those congestion patterns, like I said, you can make tons of money real, real quick when you bust free from those.
I applied that.
And then the other things I told you, did the market make a low in that first hour?
And did it extend higher?
So now I know who’s controlling momentum.
And I know which way to lean.
I wanted to just say one more thing.
I don’t want to scare you away from trading, man.
It’s awesome.
It’s a wonderful thing to do.
Just as long as you– the two biggest events we recently had was right after the election when the markets went absolutely nuts.
And today.
But most of the time, it’s not nearly this crazy.
So I don’t want you to fear trading.
It’s a great career.
It’s exciting.
But have a plan.
And I do believe technical– technicals– I’ve been asked, am I a technician or a fundamental?
So I say, I’m fundamentally technical or technically fundamental.
I don’t think you could be a trader without each.
And when you lack the fundamentals, technicals do work.
I would steer you towards something like– I think my favorite indicator, if I could steer you to one, is a stochastic.
That is one of my favorites for catching terms in markets.
You learn how to use them with a thing called divergence.
I teach this stuff every day to build strategies.
So I think stochastics of the available indicators would be my primary one I would go to.
So the best way to use it, I would tell you.
If you see a stochastic– so there’s limits on stochastic.
There’s a 20 line and an 80 line.
If the market gets above 80, it’s thought to be overbought, or below 20, it’s thought to be oversold.
That’s not necessarily true.
However you’re watching price in the stochastic, let’s say, it gets above 80.
And then the next– then it goes up and makes a new high.
But the stochastic is below 80.
That’s called divergence.
And it’s usually a great sell signal.
And it also happens on the downside too.
So there’s bullish and bearish divergence, which I think is the most reliable combination I’ve ever seen when it comes to catching turns in markets, the end of a trend or something like that.
Because what a stochastic is, it’s a momentum indicator.
So if a market is making new highs and that momentum is not being confirmed by a higher stochastic, it usually makes the means the market is going to roll over.
Now some people will get confused with RSIs and stochastics.
A lot of people use them in conjunction, but they’re not the same.
They do have the 20 and 80 barriers.
But if you’re in a trend or watching a trend, this is where RSI comes in, which is relative strength of trend.
So if you want to do a little bit of research, I would go right to those two tools because you need one to help you catch turns.
You need one to tell me, do I stay with this trade?
Is the RSI in my favor?
Is it trending in my favor?
This is how you could squeeze more money in a trend if you have an RSI to tell you trend strength and you say, boy, I got to get out of this trade because the momentum is lost and it’s stochastic.
Those two things alone can help any new trader and they are my favorite indicators for, well, you need a couple of things, right?
Tell me when a market’s going to turn.
Tell me when it’s going to bust out and tell me is this trend strong?
If you can find three indicators that give you that, you’re in a good place.
One of the interesting things we’ve seen, John, in the options market of late as well is a lot of options traders starting to dip their toes into this intraday trading as well because of course of the advent of zero DTE options just in the past couple of years.
I know for a while there was some consternation from futures traders that, man, this might eat into some of our flow here and start stealing some of our people or options traders or even futures traders might look at the zero DTE options world and go that way and not have to deal with the margin headaches and everything else of futures.
I’m curious, John, have you experimented with these at all and what are your thoughts on people going from the futures market to the options market to do their swing trading?
Well, first of all, day trading comfortably and not having to carry a position overnight is pretty comforting.
When you’ve got margin out there laying or you’ve got to open positions, particularly large positions, it can be very uncomfortable.
I have looked into them, but the way that I do it is I’m good at picking strikes where I think the market might be contained or something like that or where I have a good directional read and there’s a fellow that I talked to who used to work on the SIBO floor and his name is Mark Esposito and he really guided me.
I would give him the levels and he would go in and trade those daily options.
I’m not sure how he does.
I just send him the stuff.
We talk every once or two weeks or something like that.
I’ll ask him how he’s doing it.
I’m not sure if he’s still doing it.
I’m not a big option guy.
I’ve always been in futures.
I’ve searched for direction.
I’ve done options in the past, but lately I do open positions.
I’m just very comfortable with my style.
That’s how I play.
I’m sure it was very attractive for a lot of people to get into those short-term options.
They come highly recommended.
The guys that like to speculate, where else would you go?
That would be awesome.
It’s not my cup of tea.
Well, John, I know swing trading is your cup of tea, so I can’t imagine having a better day to have you on, John.
That’s a perfect day for it out here, listeners.
There you go, listeners.
There’s a little bit of an intro, a part one of intraday swing trading using futures.
We will obviously come back to this topic again, a perfect day or perhaps the perfect day to scare you off this topic at the end of the day.
As we’re coming into the end of the show, the S&P is off fully 3% now, the NASDAQ off nearly 4%, and the Dow off over 2.5%.
VIX Cash threatening a 20 handle, about 19.5, listeners.
Things are getting spicy out there.
Again, this type of trading, not for the faint of heart.
Take your time with it.
Listen to this segment maybe a few times if you’re considering it.
And then of course if you have more questions, send them in.
We will spend more time on future shows, I’m sure.
Going down this rabbit hole because it’s where a lot of people like to hang their hats in the futures world at the end of the day.
And John, if folks want to hang their hats with you and talk some more intraday futures trading or anything else in the world of futures, where should they go?
What should they do, sir?
Well, I have a website called the Macrograph.com.
You can go there and there’s some lessons.
It shows my unique charting.
And if you want to try my charting program, there’s lessons on how to do it.
If you go there and register, I get an automatic email and I’ll send you one back.
And if you want to have a conversation, ask questions, I’d be happy to do that.
There you go.
Check him out, listeners.
A lot of great futures information there.
And of course, while you’re checking out futures info online, only one place to go is ctsfutures.com, the place to go to kick the tires and light the fires.
Or if you want to search for T4, the letter T, the number four, futures and options just on Google or anywhere else, that’ll get you there as well.
And that gets you a free month to try out all their cool stuff as well. ctsfutures.com to learn more.
It’s going to do it for us on the network today, back again tomorrow with our usual Thursday doubleheader back with the Flowmaster and our friends over there at CME to talk some options and then some options on futures.
Very much the sister show to this one.
So if you like in this show, by all means, check out this week in futures options Friday, of course, volatility views.
And boy, will we have some stuff to talk about in the vol space.
Later on this week, listeners, so stay tuned for that.
Another reason why you should be listening to the full network.
Then we’re back again next week, all the way through to next Wednesday, another episode of the futures rundown.
Stay safe out there.
Thank you for tuning in to the futures rundown proudly sponsored by T4 futures and options experience the T4 futures and options trading platform with its seamless desktop and mobile applications, low latency and professional functionality tailored for traders and brokers alike.
Take advantage of T4 theoretical sheets, strategy solver, MBO, advanced charts, and much more.
Empower your trading journey with T4 futures and options.
Visit CTSfutures.com or search for T4 futures and options on Google to register and get a free month.
You’re listening to the options insider radio network, the home of the options podcast.
For more quality options programs, visit the options insider.com or search for options insider radio network in your podcast provider of choice.
Listeners can also access all of our programming through our mobile app available on the iTunes and Google play stores.
Most programs are also available via live stream at mixler.com/options-insider.
That’s mixlr.com/options-insider.
Don’t forget to follow along with your favorite programs and submit your own questions for the host set twitter.com/options, stocktwits.com/options, facebook.com/the options insider or via questions at the options insider.com.