A Professional Approach to Trading Futures

[steven46]

Hello Traders

Sadly we have learned of military conflict between Israel, USA and Iran that has started
a few hours ago. We have experience with this unfortunate circumstance and offer the
following comment
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What to Expect During the Coming Days

Immediate Effect on S&P 500 Futures

• Sunday Evening Opening: Futures are likely to experience a "gap down" as markets first react to the news of strikes on Tehran and the subsequent Iranian retaliatory missile launches.
• Monday New York Session: The session is expected to be characterized by heightened volatility (VIX spike). If the conflict shows signs of expansion or prolonged disruption to energy corridors, the sell-off may intensify.
• Historical Context: In previous escalations between these entities, such as in June 2025, S&P 500 futures dropped approximately 0.4% immediately upon the news. Given the "major combat operations" status declared by President Trump, the reaction in 2026 may be more severe

It is likely that we will take the following precautions prior to both the London and New York Sessions of the S&P 500 Futures

We will monitor world news and also list the high impact economic reports that may affect the markets
Based on price action during the Initial Balance (in the first hour) we may simply stand aside for that entire session
so that we can evaluate the data. In that case we would trade as early as Tuesday

Scenarios

1) Institutions will back off and liquidity may dry up for a period of time as markets move lower or
2) Markets may exhibit trading range behavior until more visibility is obtained as to world events
3) If institutions choose a "Risk Off" posture, we expect an extended move as much as 4% lower
4) If this conflict is brief (a matter of days), then institutions will look to buy back inventory at or near
Monday/Tuesday lows. Based on news to this hour, we expect a duration of 2-7 days.

Good Luck

 

[steven46]

After watching World News, and reviewing new data, we have the following
additional comments.

Please note that this is not to be construed as Investment advice, it is simply our
opinion and we suggest readers consult with their own qualified advisors before
making investment decisions
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During the next Sessions of several markets we will build small positions in the following
assets

• Flight to Quality: Expect heavy institutional flows into traditional safe havens: Gold, the Japanese Yen, the Swiss Franc, and U.S. Treasuries. Gold, in particular, is seen as a key winner during this rising tension.
• Energy Sector Dominance: The energy sector is the "obvious" rally candidate for Monday. Oil prices are expected to spike due to Iran's 3% global supply share and potential threats to the Strait of Hormuz. Analysts suggest a 10–25% premium on oil is likely, even without a full blockade; a complete closure of the Strait could lead to a 50% premium risk event.

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As mentioned previously, we will probably stand aside from the S&P 500 (monitoring only)
however it makes sense (to us) to take these actions instead of trading the S&P Market.

Good luck

 

[steven46]

And here is our plan for the next few days

Tuesday, March 3: The "Wait and See" Consolidation

Historically, geopolitical shocks lead to an initial sharp reaction that often fades if the conflict does not immediately spiral further. Institutional desks will look for signs of stabilization or further escalation.

• Assessing Escalation: If Iran continues to target civilian infrastructure or American bases in Bahrain, Qatar, UAE, Kuwait, Jordan, and Saudi Arabia, institutions will likely maintain high cash positions.
• Technical Support Levels: Traders will be watching key technical levels closely. For instance, in global markets, the Nifty 50 at 25,000 is a monitored psychological mark; similar "make-or-break" technical levels will be identified for the S&P 500 to prevent additional technical selling.
• Defensive Rotation: Institutional flows may rotate into defensive sectors such as FMCG (Consumer Staples) and Pharmaceuticals, which typically show relative stability compared to rate-sensitive or cyclical stocks during conflict.

Wednesday, March 4: Fundamental Re-Focus

By mid-week, institutional attention often begins to pivot back to broader economic fundamentals, provided the immediate military "fog of war" clears.

• Earnings and Macro Data: While the conflict is a grave threat, it does not stop the next earnings cycle. Institutions will evaluate if the "Earnings Strength" of the S&P 500—which had been outpacing the rest of the world—remains intact.
• Inflation and the Fed: A sustained spike in oil (e.g., a 50% increase) could stoke recession fears and alter expectations for Federal Reserve policy. Prior to the strikes, markets were pricing in a rate cut for June 17, 2026; desks will now be recalculating if energy-driven inflation delays this easing.
• Position Sizing over Selection: Experienced desks will prioritize position sizing over individual security selection. Given the "high-wire act" of 2026, institutions will likely trim exposure to firms with direct geographical exposure to the conflict zone while maintaining core S&P 500 positions if the broader economy remains resilient.

Critical Technical Support Levels

While watching the S&P 500 on Monday, we will be monitoring these levels closely. What we suggest for the less experienced
traders, is to simply make note of the places where you would (usually) take a position, and document the result. It's' good education
and cost you nothing except your time.

• Primary Support Zone: 6,830 – 6,842
  This area represents the most recent floor, with the February 27 session low at 6,841.50. A sustained break below this level on high volume would signal a shift in market structure from a "buy-the-dip" regime to a deeper correction.
• Secondary Support: 6,730 – 6,752
  If the 6,800 psychological level fails, the next institutional target is 6,752 (a key February breakout point) and 6,730, which marks a critical structural "lower low" threshold.
• Major Structural Support: 6,542
  In an extreme escalation scenario, the 200-day moving average and significant horizontal support at 6,542 come into play as the final line of defense for the 2026 bull trend

Good Luck