In tonight’s video, we’ll discuss how the 30 Year Bond Futures presented the most controlled volatility environment for today’s trading. While the rest of our indices gave us signals of high volatility, the 30 Year Bond Futures remained contained within the Aggressive Volatility Box.
Outside of our futures’ markets, we also had entries set up in several stocks, using our Stock Volatility Box scans, which are discussed below.
Trading 30 Year Bond Futures (ZB Contract)
To start off the morning, the 30 Year Bond futures took a nose dive after the first 30 minutes of the stock market open. Between 7-8:30 AM PT, the ZB futures fell nearly a full point (~0.60%). Meanwhile, the indices were bursting up higher, implying we were in a risk-off day-trading environment.
Our first trade setup in the 30 Year Bond Futures came as price fell into our Volatility Box entry line, at 157’23. Our Dynamic RSI confirmation came in the next candle, as our candles shifting from red to green.
However, price action did not touch the entry line again after the confirmation, for more conservative traders waiting for an entry at the same 157’23 price.
This trade ended up hitting both, our first and second targets:
- Target 1: +6 Bond ticks ($187.50)
- Target 2: +11 Bond ticks ($343.75)
If you missed the first trade waiting for the confirmation signal, there was another opportunity to go long the 30 Year Bond. The second opportunity also happened to represent a double bottom, giving us more confidence.
In our second entry, we had an opportunity (and the luxury) to wait for a confirmation signal, and enter at the same price as our trigger (157’23). This trade hit just our first target, before stopping our second contract at a break-even price. Our first target in this trade was 7 bond ticks ($218.75) away from our entry.
While the 30 Year Bond is typically the trickier market for us to trade, today it was brilliant for us. We had two successful setups, one which even gave us the confirmation that we’re typically looking for on a 3m time frame. We’ll continue to look at the 30 Year Bond Futures market as the week continues, to see if we notice a similar pattern and comparison of index-to-bond volatility.
Trend Trading Stocks for Tomorrow
Using our new Stock Volatility Box Tool, we have a few different symbols that are on our “Trend Trending” list for tomorrow (January 7, 2020).
Each of these symbols closed outside of our Volatility Box edge, and we look for them to continue to trend higher into tomorrow’s session, if they breach our clouds.
- S&P 500 (SPY)
- Nasdaq (QQQ)
- DOW (DIA)
- 30 Year Bond (TLT)
- Salesforce (CRM)
- Google (GOOGL and GOOG)
- Dynatrace (DT)
- Acadia Pharma (ACAD)
- Big Lots (BIG)
- WW International (WW)
For all of our Volatility Box members with access to the tool, you can use the list above to create a game plan for tomorrow’s trading.
The key will be to look for price to breach above either the Aggressive or Conservative Volatility Box cloud edge in the first 15 minutes of market open.
Here is a comma-delineated list of the tickers above, that you can input directly into the Stock Volatility Box Tool:
If we breach above each of those respective levels, then we’ll be looking at those symbols as likely trending candidates for the day.
However, if we do not breach those levels within the first 15 minutes, then we skip the symbol and focus on areas where we have breached.
In today’s Daily Trade Report update, we covered our two trades in the 30 Year Bond Futures that were nice winners, amidst a volatile morning within the indices.
The S&P, DOW, and Nasdaq all gave us signals to switch to our Conservative Volatility Box, while the Russell 2000 remained contained.
However, as we noticed throughout the rest of the day, only the Bond Futures respected the Aggressive Volatility Box, while the remaining of the market continued to rip higher after the melt down last week.
We have quite a few symbols on our “Trend Trading” list for tomorrow, if they cross above our Volatility Box edge levels. We cover some of these trades in greater detail in our nightly video.