First of all, let us say we do not imply that going LONG at this juncture is a good idea: it’s not. (Editor’s Note: I certainly agree with that!)
As soon as the market reaches above ~2100 it will be OVERBOUGHT according to our DAILY, WEEKLY and also MONTHLY SHORT model, so you do not want to be a LONG holder at the top.
However, each time the market goes down (as it did yesterday), an occasion for a DAILY swing trade is created and these occasions sometimes can be VERY profitable. Our ES DAILY LONG model can help with that, providing some information that can take away the noise produced by looking at charts or checking the news (there is no information in there, just noise). For example today we are seeing this, for the current retracement down currently unfolding on the ESZ15 market:
The above model is showing us that, on average, since the year 1950, this specific type of “retracement pattern” is found several times in our proprietary database and it tends to end in the price areas between 2055 and 1948 (i.e. go up from there). Keep in mind this is the tendency, then we need something more precise to pinpoint the area where to place out trades with a good chance of success. That is what is shown in the other section of the model (RL Trades) below:
For example, we can see highlighted the Retracement Levels between 2075.75 and 2001.50, this is the area where our computer model, based on a number of calculations, predicts that the market will turn up again. So, for example if you place your bets in the 2055-2001 area you have excellent chances to see a DAILY reversal (i.e. price going up) and you can profit on that.
This is basically a systematic, mechanical approach, it’s probably boring for some of you, but it works and produces regular profits, day after day, for our clients, since 2008.
The model above provides a wealth of information to see where is your break-even, hypothetical profits based on profit targets and 2 trading systems:
- with stop loss
- using averaging down (not doubling down, calibrated progressively larger bets coupled with the use of a Stop Loss, for example 1% or 2%, so it is perfectly safe).
If you are trading the ES LONG, our suggestion is that you try to go LONG at or around the levels indicated and scalp a good profit on the reversal towards the ~2100 mark.
Click here if you want to gain access to all our quantitative trading models, we cover a number of selected ETFs, FX Spot, Indices and Futures markets (full list).
