XYZ-Trader-

S&P Analysis Week of 11/1/2020: Election 2020

CME_MINI:ES1!   S&P 500 E-mini Futures
This is the week of the presidential elections in the United States. How will the election madness impact the stock market?

If you want to know exactly what happens during this week, you came to the wrong place. Sorry.

What I do know is that there is the potential for two very profitable trade setups. Similar to last week, I believe price is consolidating to make a break away move in either the northern or southern direction (highlighted in the No Man's Land pink box). Isn't that convenient that price has pegged itself into an area where the technical pattern allows for either breakout direction. There are no coincidences in the stock market.

I'm neutral as to the direction the market goes, however, it is worth pointing out that price seems to have started to form a bearish flag last week. Not always, but these typically break down in the southern direction. I believe the market is going to do what it does regardless of who wins the election.

I think the setups I've labeled on the chart are self explanatory. Just remember DO NOT PLAY THE BREAKOUTS. Always wait for price to come back to test the breakout/breakdown area and resume off. This is just a general good trading principle. Also, don't play in No Man's Land.

If my charts seem overly simple, that's because they are. Trading is complex so I try to make it look really easy. I focus on major support/resistance lines that provide entries into the direction of the trend. This has served me well and made trading a lot simpler and my previous posts have been spot on week after week using this method.

Remember:
"When it feels really right, it's probably wrong. When it feels really wrong, it's probably right."

Good luck trading. Don't forget to support me by hitting the like button.



Trade active: Price spent Monday testing and closing above 3300. During the futures (monday evening), price made a higher high after the retest. This is a buy entry for those that are willing to risk taking a trade into election.

Because the market gave me my buy signal, I will take it. Since there is a high risk event in the U.S. on Tuesday, I will be taking a smaller than usual position on this long.

To manage my risk, I have a tight stop loss under 3300 and I will set my stop loss to break even once price hits its first resistance (if I'm not stopped out before)

Comments

Simplex sigillum veri, love it, thanks.
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@jgaldon, Thank you for the kind comment
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Great chart! I profited from a great short trade you predicted last week. I look forward to great results again this coming week using your chart.
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XYZ-Trader- Lifesave3
@Lifesave3, Always happy to help when I can. Thanks for the nice comment.
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great content!!
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XYZ-Trader- mjmassens
@mjmassens, Thank you for your kind feedback
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mjmassens XYZ-Trader-
@XYZ-Trader-, Looking on a bigger time scale, I see the 2018 top as a magnet. It had lots of touches in 2018, breakout in Oct 2019 that led to the FEB ATH, support turned resistance in late February, breakout in May, hit that number as the June low, and on Friday, we hit the June highs as support. Logic would say if we go lower, the 2018 high would be the next target (around 2943). Bigger picture upside target is the February high.
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XYZ-Trader- mjmassens
@mjmassens, nice analysis. I completely agree with you. Thanks for pointing out that 2018 high. I marked it on my chart so if we start heading to that number I'll be prepared for a battle at that target.
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mjmassens XYZ-Trader-
@XYZ-Trader-, Look at Nasdaq futures, Log scale. https://www.tradingview.com/chart/1lnqAIuy/ New down channel, just like October setting up. SPX hit resistance at a major, major line. This is in Linear scale. https://www.tradingview.com/chart/1lnqAIuy/ Same down channel forming, albeit more slowly. Russell has a topping candle on Friday. Rotation into big tech Monday, Value down Monday. Then flip that for turnaround Tuesday...tech down, value up. Rinse repeat all the way down the channels to fill the gaps.
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XYZ-Trader- mjmassens
@mjmassens, Thanks. That's very interesting. I will definitely take what you said into consideration when coming up with next week's chart.
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