ChartTrader - S&P Futures

ChartTrader saw the implied S&P 500 breakout scenario in place on Monday afternoon and put the trade on Tuesday premarket in the March 2017 S&P futures, stating that he saw data suggesting long-only money managers had over-hedged in the range and would be vulnerable to indexing on a breakout, forcing the market to regain its larger trend momentum as data on the economy and earnings continued to strengthen. The trade has provided as much as 30 pts in gains so far.

23-Jan-17 15:44 ET	CHART	ChartTrader: Looks like we are setting up for another save of the range as index buyers step in yet again. Really turning into a remarkably tight pattern at this point. Will likely start to trade for the breakout on the long side tomorrow. See premarket Notes.
24-Jan-17 08:56 ET	CHART	ChartTrader: ESh7 Long Trade -- Buying some S&P futures at 2263.00; risking 10.00; half-size position Like a long in SPY.
24-Jan-17 09:10 ET	CHART	Premarket Summary Coming in Long S&P futures (Long ESh7) in the March 2017 contract from 2263 at half size, with a stop back at 2253. Also still sitting short 30-yr bond futures (short ZBh7) in the March 2017 contract at 1/3 sizre from 152'10, with a stop above at 154'00. I am expecting a breakout to new highs today based on my sense of the evolution of this trading range, as discussed in yesterday and today's ETF Daily Notes (today's edition about to be published ahead of the opening bell).
24-Jan-17 10:36 ET	CHART	ChartTrader: Note, bonds breaking lower here as stocks push to new session highs Still get the feeling that top-down asset allocation players are in charge of the action here. In terms of the context, we've seen an increase in cash holdings and new put positions by both small and large traders in recent action in stocks. But the S&P range has not been able to break lower. That arrangement can lead to a scramble of buying in futures and index ETFs if we puncture recent highs. I am still long the S&P and short bonds. Both may end up working in our favor here as this action plays out today.
24-Jan-17 12:57 ET	CHART	ChartTrader: So far so good on the top-down risk-on strategy today... plan to let both positions run without much interference Sitting up about +10 pts in the S&P long and +50 ticks in the Bond market short. See 10:36 and premarket ETF Daily Notes for more color.
24-Jan-17 13:21 ET	CHART	ChartTrader: Just want to reiterate this point, in case you missed this theme woven into earlier comments I said this yesterday morning and this morning premarket and again after the open: "we've seen an increase in cash holdings and new put positions by both small and large traders in recent action in stocks. But the S&P range has not been able to break lower. That arrangement can lead to a scramble of buying in futures and index ETFs if we puncture recent highs." This is a world where we are seeing clear markers of accelerating growth (look at PMI's and earnings). Long-only money managers can't afford to not show market-matching gains in that type of context if this market breaks out again. That combination (increased cash and hedging along with a face-value bullish context) means that the only strategy for dealing with a strong market is to buy index exposure. That's why we were buyers this morning: because the pattern has built to a head with that type of tipping-point/cascade dynamic looming above current prices. The acceleration higher we are seeing in the market in the past few minutes is some of that scramble for index exposure.
24-Jan-17 15:23 ET	CHART	ChartTrader: ESh7 Long update -- Banking a little of the S&P 500 futures long here for about +16.00; stops to 2258 Will keep a piece on overnight looking for 2300 area. Nice move today. See premarket Notes for details, and 8:56 and 9:10 for entry info.
25-Jan-17 10:28 ET	CHART	ChartTrader: ESh7 Long Update -- Moving stop on S&P futures long trade from yesterday to 2265...up as much as about +30 pts on the trade thus far, looking for more from it See today's ETF Daily Notes for more details.