Futures Radio is a weekly talk show hosted by 18-year futures veteran and CME member Anthony Crudele, an ex-pit trader and one of the first to trade the E-Mini S&P. Each week Anthony talks with traders, CEOs, and other proven market participants about relevant trading and investing information.

A Warning Sign For S&P

Posted on Jan 31, 2018

Subscribe for New Shows & Blog Posts
We respect your privacy.

Yesterday on Periscope I spoke about the action I was seeing in the Bond/Treasury Market and the S&P (ES).  With yesterdays weakness in the ES we did not see a bid come into the Bond/Treasury market.  I actually saw the opposite as they were all trading weak together.  If you look at the chart below you can see the 30 yr, ES & 10 yr have been moving together over the past 5 days.

In my opinion this type of action could be a problem for the Stock Market.  There is a ton of money invested in this Risk Parity trade and even a small amount of unwinding of this trade could result in big moves for both Equities and Treasuries to the downside.

I use a strategy that dictates my trading so noticing this action in Bonds/Treasuries & ES is only a warning sign, not a reason to be short ES.  

Which brings me to my ES strategy chart.  Today’s close is very important to me.  A daily close below 2835 indicates a possible test of 2768 in the coming days/weeks.  Two ways I typically execute this type of trade.  One way is using options and the other way is day trading futures using shorter term charts to look for short opportunities.  Typically when I have a daily signal for direction I only trade that direction until the daily chart changes.  That means I will only look at shorts until the target of 2768 hits or we get a daily close back above 2835.  If we close today above 2835 then all bets are off for me looking short & I think that we continue to grind higher.

With the look that I am seeing between ES & Bonds/Treasuries I will use that as confirmation when executing.  If Bonds/Treasuries are going down with ES I will look to be more aggressive with shorting ES.  If Bonds/Treasuries are not going down with ES, then that correlation I noticed is breaking down & will no longer use it for confirmation.

2 Comments

  1. Nice trade. I had a lot of it. Might have more a run next week.

    Post a Reply

Submit a Comment

Your email address will not be published. Required fields are marked *