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Cartography Corner – March 2021

Written by Michael Lebowitz | Mar 1, 2021
Futures, Cartography Corner – March 2021PRINTER FRIENDLY VERSION

J. Brett Freeze and his firm Global Technical Analysis (GTA) provides RIA Pro subscribers Cartography Corner on a monthly basis. Brett’s analysis offers readers a truly unique brand of technical insight and risk framework. We personally rely on Brett’s research to help better gauge market trends, their durability, and support and resistance price levels.

GTA presents their monthly analysis on a wide range of asset classes, indices, and securities. At times the analysis may agree with RIA Pro technical opinions, and other times it will run contrary to our thoughts. Our goal is not to push a single view or opinion, but provide research to help you better understand the markets. Please contact us with any questions or comments.  If you are interested in learning more about GTA’s services, please connect with them through the links provided in the article.

The link below penned by GTA provides a user’s guide and a sample of his analysis.

GTA Users Guide


February 2021 Review

E-Mini S&P 500 Futures

We begin with a review of E-Mini S&P 500 Futures (ESH1) during February 2021. In our February 2021 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for February are:

  • M4                4128.50
  • M1                3971.50
  • PMH             3862.25
  • M2                3709.00
  • Close            3705.25      
  • M3                3661.75
  • PML              3652.50
  • MTrend        3650.25      
  • M5               3552.00

Active traders can use MTrend: 3650.25 as the pivot, maintaining a long position above that level and a flat or short position below it.

Figure 1 below displays the daily price action for February 2021 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  Our analysis accurately identified the pivot point realized in February.

On Sunday night, January 31st, 2021, the market price continued its weakness from the GameStop-induced volatility of the previous week.  The market price tested our isolated clustered support levels, including our isolated pivot level, at M3: 3661.75 / PML: 3652.50 / MTrend: 3650.25.  The low price for the month was realized that night at the price of 3656.50.  By the market close of February 1st, it had rallied 109.25 points, or 2.99%, to settle at 3765.75.

The following nine trading sessions saw the market price continue its rally, reaching the high settlement price for the month on February 12th at 3931.00.  A cumulative rally from its low of 274.50 points, or 7.51%, amidst an interest rate environment that saw the Ultra-Long Bond Futures contract drop in price by roughly 7 ½ points.      

On February 16th, the equity market began to pay attention to the bond market.  The high intra-session price for February was realized during the February 16th trading session at 3929.25 however, it settled 0.80% off its high and lower than the previous trading session.  Over the final eight trading sessions of February, the market price declined 118.50 points, or 3.02%, on a settlement basis.  (The Ultra-Long Bond Futures contract declined a further 9 1/2 points.)

Conservatively, active traders following our analysis realized a gain of 1.16%.  

Figure 1:

Futures, Cartography Corner – March 2021

WTI Crude Oil Futures

We continue with a review of WTI Crude Oil Futures (CLJ1) during February 2021.  In our February 2021 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for February are:

  • M4         63.95
  • M1         58.44
  • M3         55.88
  • PMH       53.94
  • Close      52.20
  • M2           50.44
  • PML        47.18  
  • MTrend  46.71              
  • M5           44.93

Active traders can use M2: 50.44 as the pivot, maintaining a long position above that level and a flat or short position below it.

Figure 2 below displays the daily price action for February 2021 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first eight trading sessions of February saw the market price ascend to, and settle above, our third isolated resistance level at M1: 58.44.  On February 11th, it consolidated before its next major push higher in price.

Over the following nine trading sessions, accompanied by higher volatility (with M1: 58.44 acting as support), the market price ascended to our isolated Monthly Upside Exhaustion level at M4: 63.95.  The high price for February was achieved on February 25th at 63.81.  For those keeping the score, that is an error of 0.2%.

Figure 3 below is a monthly candlestick chart of WTI Crude Oil with a starting date of June 2008.  As shown in the graph, the market price is at a major inflection point.

Conservatively, active traders following our analysis realized a gain of 18.6%.

Figure 2:

Futures, Cartography Corner – March 2021

Figure 3:

Futures, Cartography Corner – March 2021

March 2021 Analysis

We begin by providing a monthly time-period analysis of E-Mini S&P 500 Futures (ESH1).  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Weekly Trend         3890.69       
  • Daily Trend             3858.58
  • Current Settle         3809.25       
  • Monthly Trend        3749.19       
  • Quarterly Trend      3274.01

The relative positioning of the Trend Levels remains bullish, although the magnitude of the bullishness is weakening (Current Settle < Daily Trend < Weekly Trend & Monthly Trend creeping up to Current Settle).  Think of the relative positioning of the Trend Levels like you would a moving-average cross.  In the quarterly time-period, the chart shows that E-Mini S&P 500 Futures are “Trend Up”, having settled above Quarterly Trend for three quarters.  Stepping down one time-period, the monthly chart shows that E-Mini S&P 500 Futures are “Trend Up”, settling four months above Monthly Trend.  Stepping down to the weekly time-period, the chart shows that E-Mini S&P 500 Futures are in “Consolidation”, after having been “Trend Up” for fifteen of the past seventeen weeks.

Support/Resistance:

In isolation, monthly support and resistance levels for March are:

  • M4 00
  • M1   25
  • PMH     25
  • M3         25
  • Close       25      
  • MTrend     19
  • M2             50
  • PML           50         
  • M5              75

Active traders can use MTrend: 3749.19 as the pivot, maintaining a long position above that level and a flat or short position below it.

Futures, Cartography Corner &#8211; March 2021

10-Year Treasury Note Futures

For March, we focus on 10-Year Treasury Note Futures (“Tens”).  We provide a monthly time-period analysis of TYM1.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Quarterly Trend    138-25           
  • Monthly Trend      136-10
  • Weekly Trend       134-24           
  • Daily Trend           133-08           
  • Current Settle       132-23

The relative positioning of the Trend Levels is as bearish as possible.  Think of the relative positioning of the Trend Levels like you would a moving-average cross; the Trend Levels are lower as the time-periods decrease.  As can be seen in the quarterly chart below, Tens are “Trend Up”, having settled above Quarterly Trend for nine quarters.  Stepping down one time-period, the monthly chart shows that Tens are “Trend Down”, having settled below Monthly Trend for five months.  Stepping down to the weekly time-period, the chart shows that Tens have been “Trend Down” for four weeks.

Figure 4 below is a quarterly candlestick chart of 10-Year Treasury Note Futures with a starting date of 4Q2005.  As shown in the graph, the market price has returned to a zone that represented peaks in 3Q2012, 3Q2016, and 3Q2019.  Time will tell if that zone now offers support.

Figure 4:

Futures, Cartography Corner &#8211; March 2021

One rule we have is to anticipate a two-period high (low), within the following four to six periods, after a Downside (Upside) Exhaustion level has been reached.  The signal was given the week of February 15th to anticipate a two-week high within the next four to six weeks (now, three to five weeks).  That high can be achieved this week with a trade above 135-27.  The signal was given in February to anticipate a two-month high within the next four to six months.  That high can be achieved this month with a trade above 138-06.  The signal has been given in 1Q2021 to anticipate a two-quarter high over the next four to six quarters.  That high can be achieved in 2Q2021 with a trade above 139-25.

Support/Resistance:

In isolation, monthly support and resistance levels for March are:

  • M4         138-18
  • PMH       137-10
  • M1         136-13
  • MTrend  136-10
  • Close      132-23
  • PML          131-31
  • M3         128-13             
  • M2         127-29                         
  • M5           125-24

Active traders can use PML: 131-31 as the pivot, maintaining a long position above that level and a flat or short position below it.

Futures, Cartography Corner &#8211; March 2021

Summary

The power of technical analysis is in its ability to reduce multi-dimensional markets into a filtered two-dimensional space of price and time.  Our methodology applies a consistent framework that identifies key measures of trend, distinct levels of support and resistance, and identification of potential trading ranges.  Our methodology can be applied to any security or index, across markets, for which we can attain a reliable price history.  We look forward to bringing you our unique brand of technical analysis and insight into many different markets.  If you are a professional market participant and are open to discovering more, please connect with us.  We are not asking for a subscription; we are asking you to listen.

2021/03/01
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