The Day After The 2016 Elections Sees Largest 2 Day Presidential Price Swing Since 1980
How Did The Power E-Mini Momentum System Do?
If you were watching the overnight futures on Tuesday you saw a market in complete free fall as the numbers starting coming in showing a Hillary Clinton loss.
The Overnight Futures Plunge 5% To “Limit Down” Circuit Breaker Levels In Watershed Sell-Off.
Results Of 2016 Presidential Elections Cause Massive Price Swing In Futures Market
As Hillary Clinton’s path to victory shrunk Tuesday night and it became clear that Donald Trump would become the next President of the United States, the overnight futures market began a massive sell-off to a magnitude we see only rarely. At one point the Dow futures were down more than 800 points. The drop was so forceful and unrelenting that it hit the 5% “Limit Down” circuit breaker put in place by Futures Exchanges used to prevent a catastrophic runaway market. (When the 5% level is reached, trading continues but traders are unable to sell contracts for a lower price.) I sat and watched this super high-volume churn occur real-time on Tuesday night in the ES stuck at 2028.50. As time went on the markets began to gradually climb off of the limit down level and started a forceful retrace that ran all way into the open. After some wild swings the market settled into a steady albeit highly volatile Accumulation run the remainder of the session – with the ES gaining 50+ points back intra-day.
Why Did The Market Bounce So Hard After Such A Devastating Sell-off?
Many feared the market would continue lower for several days if not weeks. But instead we ended seeing the “Mother Of All Bounces” – with a massive rally ensuing the very next day. What in the world caused this reaction after the markets had gotten so spooked?? First the general market was already at oversold levels having dropped 3.2% over the preceding 7 days so we were setup for a bounce at some point. Secondly, markets hate indecision and once the election results were finally in and the dust started to settle fears were calmed and buyers decided to step up to the plate and buy the dip. However that does not fully explain the forcefulness of the bounce. The real drivers to such a massive reversal lay in 2 other more Technical Factors. For starters, a large number of hedge fund managers and other large investors, had assumed that a Clinton win was inevitable had taken BIG short positions across the board in sectors expected to drop after Hillary had been declared the victor, namely pharma and banking stocks. The sudden surprise of such an unexpected election outcome caused these large investors to have to scramble and “Buy To Cover” to exit their short positions. Tack onto that the sheer short squeeze volume in the futures market after the 5% drop and you can see how the market was able to turn on a dime with such force. As soon as the momentum picked back up to the upside the Algos woke up and drove the market super hard with automated programmatic buying. Any day trader with a lick of sense was trying to get long all day as well – adding fuel to the fire. So when all was said and done we ended up with the amazing 2 day chart above.
So How Did The Power E-Mini Momentum System Do The Day After?
Although the chart above might look easy to trade.. (Just buy low and sell high right?) – it is anything but. For one thing, each bar in the range chart above is a full 10 ES points. When you consider the incredible built-in leverage in the futures market and the massive number of quick price swings, extreme volatility, false moves and reversals, an amateur trader could easily have had their head handed to them after just a few trade attempts. It was a super fast, super hot – high octane market so accuracy and timing was paramount. If your entries aren’t super precise in a blitzkrieg style market like this – price can easily move 4-5 points back against you before you know what even hit you. Let’s take a look at how the sophisticated Power E-Mini Momentum System fared in such a volatile – high octane market.
First it’s important to understand that it is next to impossible to “Officialize” Individual Trading Stats or ROI based on Trading Signals that are used by a large group of traders who may be at different levels… there are simply too many trading variables that come into play. But that’s OK because we are not attempting to do that.
A Quick Primer On How We Gauge Day Trade Signal Alert Stats and System Performance
A simple and effective way to measure the accuracy of any Trading Signal is to plot the amount of Positive vs. Negative tick movement experienced AFTER you get a Trade Alert. The “heat-map” below is designed to show the “Raw Performance” for our Power Emini Momentum System Trade Alerts in an impartial and non-subjective way. In Trade Example The purple vertical line with the green dot represents the point for reaching a 1.5 point or “Delta-Neutral” position – where most traders are able to get to a break-even, no-lose trade configuration.
Here Is How Our Emini Momentum Breakout System Performed The Day After The Elections
Positive Vs. Negative Traction
If you look at the heat-map above for Wednesday’s Automated System alerts that went out through the Power Emini Trading Desktop Alert Software, you will see the Chicago CME times and the Alert Prices in the middle. The market opened high and kept going higher. You can see how the system had us long most of the day but caught one nice well-timed short trade. There were 12 alerts although only 9 engaged into trades per our basic entry rules. The nimble and quick Emini Day Trader working off of sophisticated precision signals is able to profit handsomely on the forceful trending action flowing through the markets on a day like this. The Green on the right of the Alert Price represents Positive Traction or Profit Potential and Grey on the left represents Negative Traction or loss potential after Trade Alert Signals were received. Where an individual trader gets a fill is dependent on numerous factors that come into play at the time of the trade.
All in all it was an extraordinary day, reminiscent of the trading we had right after Brexit and the system took full advantage of the opportunity presented in this type of fast market.
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