FOMC Trade of the Day & Equity Peaks 3/17/2021

Jerome Powell gave the market what it wanted and we saw a pop in the markets. Gap Continuation and Reverse E-mini S&P was the trade of the day on March 17, 2021. 

The market pulled back overnight and failed to follow through to the downside, early in the day session. This has become a familiar pattern since 2016 where the market is propped up at the lows in early trade and then reverses. 

Gap Continuation and Reverse can also be considered a delayed Gap Fill strategy. 

We take advantage of the constant dip buying in this market. Even though we believe prices should move lower, we are willing to day trade the long side if that is where the liquidity takes us.

Gap Continuation & Reverse E-mini S&P

The Gap Continuation and Reverse E-mini S&P trading system is a strategy developed in Q4 of 2020 designed to capture classical V reversal patterns and short covering rallies in the E-mini S&P.

This pattern has become more common since 2016 and with the increase in volatility. We anticipate higher levels of volatility will remain in the market. This pattern was in the market prior to 2016 but with higher price levels in the stock indexes and higher daily ranges, we see this pattern as an opportunity for years to come.

This strategy takes long trades when the market gaps down, continues, and then starts to reverse. The strategy will take short trades if the market starts to roll over.

Tradestation Performance Summary for Gap Continuation and Reverse E-mini S&P
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