"Here come those tears again
Just when I was getting over you
Just when I was going to make it through
Baby here we stand again
Like we've been so many times before
Even though you looked so sure" – J Browne
While it's been fun watching the Dow 30 blast higher, the S&P 500 has been struggling to get back to where we were at the end of August when I warned on "Toppy Tuesday – S&P 2,900 so it’s 3,000 or Bust!" as well as "Will We Hold It Wednesday – Record Highs Edition" and we were shorting the S&P (/ES) Futures at 2,915 and we got another entry yesterday as we topped out at 2,917 just before 3pm.
At the time, we were shorting Gasoline (/RB) at $2.10 and now it's $2, which was good for gains of $4,200 per contract if you rode it out all the way (we were in and out several times since) and we shorted Oil (/CL) at $70 (and we're short again now) and went long on Coffee (/KCN9) as it tested $100, which worked at the time but now it's down to $94 so a lot of things are not improving – including the Nasdaq, which is down from 7,700 to 7,500 (2.5%) while the S&P has bounced back.
As the song asks – what's different this time? Aren't we just setting ourselves up for more heartache as we're teased yet again by the record highs? I believe there's a better chance in profiting from a re-test of 2,860 (our 30% Line on the Big Chart) than there is of seeing 2,920 so it's a very nice risk/reward play as stopping out at 2,921 is a $300 per contract loss while 2,870 (which we hit last time) is a $2,500 per contract gain. Futures trading is all about looking for risk/reward scenarios that are massively in your favor and then trying not to be wrong more than 80% of the time!