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E-mini S&P 500 Futures (CME) (OANDA EU Clients)

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The Jan to Dec of Technical Analysis - 1 strategy per month1. January - The Value at Play Before we start discussing the different technical chart patterns, we need to have some clarity on how buying and selling happens on stocks and options. Every trade has a buyer or seller. That means at a specific point in time, for a specific price there are 2 conflicting thoughts Someone who thinks the price is too cheap Someone who thinks the price is damn expensive The guy who thinks the stock/option is cheap is ready to buy and the guy who thinks it is expensive and it is a good time to sell. Just think, how is it that two people can have conflicting mindsets about the same instrument at the same time? I am 100% sure that both of them cannot be right, one of them is making a wrong decision. Over time - 5 minutes, 50 minutes, 5 hours, 50 hours, 5 days, 50 days, or 500 days - whatever the period be, that particular instrument will tick away from the quoted price - either move up or move down. This leads to the important question - what is the fair value? If you have an internal price gauging mechanism - you can quickly calculate if the price quoted is below or above the fair value. Wow, that looks exciting - can you give me the shortcut to calculate the fair price? Unfortunately, there is no holy grail that does it for you, over time you need to develop that tool or spreadsheet. Have you heard the saying, “Veterans are good stock pickers” - It is mainly because of their experience in the markets. They have developed the intuition to guess the fair value when they see the ticker tape without relying on a spreadsheet or calculator. The first rule is “Never buy anything at a premium and never sell anything at a discount”. This rule does not guarantee that you will not lose money - but it is a filter that weeds out poor decision-making. The question arises - how do I calculate the fair price of a stock or options strike? A good place to start would be to start reading “The Little Book of Valuation: How to Value a Company, Pick a Stock and Profit (Little Books. Big Profits) by Aswath Damodaran” - you can even finish the book in 2 straight hours. It gives some insights into valuation techniques. Most valuation methods available in the markets are part of “Fundamental Analysis”, you might ask me - “What does that have to do with Technical Analysis?”. My answer is everything. Technical Analysis is the process of guessing the future price by looking at the historical data. But what the stock/option has to do with the price today is mostly due to fundamental reasons. A mix of fundamental + technical study is much better than pure fundamental or pure technical analysis. These days lot of people have turned to options trading as a side gig to make some extra money. Someone would have told them, that it is easy to make money in options trading. The biggest mistake they make would be to short-sell a strike too cheap and buy a strike too pricey. Option premiums do not move in a linear pattern and are totally different from the valuation techniques used to gauge the underlying. If you are able to calculate the fair value of a particular strike with some level of accuracy - then you can avoid selling it cheap and buying it pricey. More often than not, not taking a trade would be the best trade there is. If something is way above your price level, choose not to buy. If way below, choose not to sell. Have faith that a better opportunity will come and gather the courage to skip the trade. There are 2 option types - CALLS and PUTS. The option strikes above the current trading price are called CALLS and the strikes below the price are called PUTS. The premiums of these far-away strikes are not that easy to calculate or guess, mainly because the prices are derived by a few factors like price movements, time, level of uncertainty & the interest rates in the markets. This makes options trading like a double-edged sword. You get it right - it will reward you more than you can imagine. You get it wrong - it will take away what you have and more. I think hard guessing the fair value of a particular strike of a stock or index is 10 times more complicated than assessing the intrinsic value of that index/stock. This means if you took 15mts to find out the fair value of say “PQR” stock, you might take 150+ minutes to assess the price of a strike say 2600 CE when PQR is trading at 2500. The challenge here is that, once you calculate the fair price - the goal post would have shifted. A change in time will affect the strike prices as “time” is a variable that contributes to its value - so it is a moving target. Now tell me, what would you call someone when they say “Options trading is easy”, “You can make 100000 in 1 month with just Rs1000 capital”, “100% guaranteed success in options trading…” etc. The next thing to know is the difference between trading and investing. Both are tools intended to make money but the main difference is the “time” component. Investing is usually done with no particular “time” value in mind whereas trading is done for a specific “time period”. That is why you hear people say, I have bought “XYZ” stock for the long term - Even if it appreciates in price say 10% in 10 days, the investor may not sell it. Partly because they do not want to miss out on further gains after selling. On the other hand, trading is done with a specific time frame in mind. The trader is only worried about the prices during that window. What happens after that is none of this botheration. The fear of missing out seldom affects the trader because they know their next opportunity will come if they keep looking. Time has more relevance & weightage than you can possibly imagine. In fact, price is relative to time and it is not the other way around. You can physically measure this concept in options trading wherein strikes go to zero value on the expiry date. The major index options have weekly expiry and the stock options have monthly expiry. So a particular strike will go from “X” value to “0” value in a week. Also important to note that during this lifecycle the strike could swing between X to 4X to 100X to 0.5X to 0.2X and end at 0 after the expiry. The prices of a strike are much more volatile than their underlying - this is the main reason options trading is a double-edged sword. Generally, people do not respect time. Most of them respect money more than time. The decisions they make are usually to save money even if it means to waste time. If you are into stock markets - that should change. Even though your purpose is to make money - you should give the due credit to the “time factor”. Let me explain with an example. A trader buys 100 qty of ABC at 1500 intending to sell it at 1600 once the results are out. If on the results day the prices drop to 1400 - that trader will say “Let me not book the loss, I will hold it for some more time for the prices to recover”. In this particular instance, the trader is not ready to book the loss but hoping that his money will recover. Most long-term investors are traders who forget to close their trades. A trader has to have a 180-degree opposite mindset of an investor because we are playing with limited resources. If your money is blocked on a particular trade for a period longer than your calculation - then it is 100% true that you will not be able to take another trade when there is an opportunity. No trader in the world has unlimited resources and unlimited leverage but all of them have got the exact same amount of time per day. If you know how to manage the time - the money will find a way. This comes to the final segment of this chapter - “Value at Play”. It means the amount of money adjusted for the time factor to the reward it brings in. You might be familiar with the word “Value at Risk” (VaR). Value at Play is something similar but not measured in the same way. .... to be continued...
TVC:SPXEducation
by viswaram
SPX 500 The SPX500's upward journey within the confines of the rising channel suggests a market that is optimistic about future economic conditions and company earnings. However, the path is not linear, which is typical of stock markets; it's characterized by peaks and troughs even within a general trend, reflecting the constant ebb and flow of investor sentiment and reaction to external factors. As the index approaches the channel's upper boundary, investors might anticipate a test of this resistance. A breakthrough could be read as a sign of strength and a possible continuation of the bullish trend. However, if the price fails to breach this level, it could indicate an imminent pullback, with the Fibonacci levels serving as potential areas where buyers might re-emerge to push prices up again. The oscillator at the bottom, hovering around its mid-point, suggests that the index is not in an extreme state of being overbought or oversold. It indicates a market in balance, but one that is perhaps poised for a breakout move if a catalyst emerges. In conclusion, the SPX500's chart tells a story of a market in an uptrend but facing a moment of truth as it encounters a crucial resistance level. Investors will be scrutinizing forthcoming economic data, corporate earnings reports, and geopolitical events, all of which could tip the balance and set the index on its next significant trajectory. This chart is a snapshot in time and one piece in the larger puzzle of market analysis. It provides a framework for decision-making, not a crystal ball. As always, prudent investors will consider multiple data points and market signals before making investment decisions.
SP:SPXLong
by pratik2358
S&P 500 trend analysisDear Traders, We have observed the S&P500 chart to be trending in a trend channel since the lows of 2009 crash. Also, market few local support & resistances. The conclusion we got from this is very simple. S&P500 heading for a fresh bull run for the targets of the levels of 6500 + within 2-3 years of time span. Which sectors will be leading? Please comment and stay tuned for more updates. P.S: Given is information sharing based of personal observation & is not any buy or sell recommendation. Please consult you registered financial advisor before making any trade or investment
SP:SPXLong
by Noob1003
S&P 500: A Look at November and Expectations for December 2023Welcome to my first analysis on englush language. Macroeconomic Context November 2023 has been a month marked by key macroeconomic dynamics. The fall in 10-year bond interest rates has had a significant impact on the market, generating a well-known negative correlation that justifies an increase in stocks​​. However, this rapid rise in stock prices has made it difficult to adopt an overly bullish stance, and a pullback seems imminent and necessary​​. Fundamental Analysis In fundamental terms, inflation in Europe and its influence on ECB monetary policy have been relevant factors. Disinflation continues in the Eurozone, supporting the expectation that the ECB could stop raising interest rates​​. Additionally, the rise of mid and small-cap stocks, driven by the long-term interest rate declines, has been noteworthy​​. Technical Analysis From a technical perspective, the S&P 500 recorded a 14.5% increase since the beginning of the year, reaching 4,415.00 points on November 13, though it experienced a 4.2% decline from the July high​​. The index crossed the upward trend line on November 3, overcoming the 4385.00 points resistance and suggesting a possible further growth​​. Future Projections and Scenarios Looking towards December, the "Santa Claus Rally," a trend that typically materializes towards year-end, is a factor to consider. Investors are expected to seek to bolster their performance indicators before the year's end​​. Moreover, experts predict various scenarios for the S&P 500. BofA Global Research suggests it could end 2023 at 4,600 points. Barclays, on the other hand, offers three potential routes: a bullish scenario taking the index to 4700 points, a baseline forecast placing it at 4150 points, and a bearish scenario with a decline to 3650 points​​. Conclusion The S&P 500 has shown notable resilience in November, driven by macroeconomic and fundamental factors, as well as a favorable technical trend. However, uncertainty remains, especially with potential fluctuations in December. Investors would do well to remain alert to macroeconomic signals and market movements in response to monetary policies and global developments. Prudence and adaptability will be key to navigating a market scenario that remains complex and constantly evolving.
CAPITALCOM:US500
by Ivan_Campuzano
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