Here's why I have a bullish bias today

Friday's session began with a Globex rally several points above fair value. The GDP report at 8:30am kyboshed that, but it wasn't too long after the cash session opened that shorts were squeezed in powerful fashion once more.

After the morning squeeze ended with similar suddenness as it began, price action drifted & fluttered sideways to lower from there. A pattern we've seen repeated over and over again in the past two years: stealth rally, short squeeze rally, rising in agony... label it as one will. Regardless, the major indexes closed the week higher than they opened despite a "drunken crow" flight pattern to get there.

20dma
30dma
50dma

ES (+$50 per index point)

S&P 500 futures remain bullish after a choppy week upwards in direction. Previous Friday's (1/20) red surge candle that powered lower was followed by four ugly "doijs" of various description and capped by last Friday's opening bell short squeeze.

Support comes in near 1280 initially, followed by 1276+ and then slightly lower. Next resistance is recent highs from Thursday 1/19 and then four-year highs near 1300 from 1/11.

ES (+$50 per index point)

Using swing value points 1-2-3 from the chart above, projecting Fib values into the future shows 1344 as a viable upside target before significant selling might cap things off. We could see a push to those higher levels sooner than later if this upside lurch continues.

ER (+$100 per index point)

Russell 2000 futures are the power train to this current rally. The small caps (and to slightly lesser extent) mid caps have been heading upwards in bullish, methodical fashion. This daily chart of the ER shows light support near 725 and stronger support at each grid level lower. Price action is stretched way above MA values, which usually resolves in a market moving sideways to lower until the twain meet once again.

ER (+$100 per index point)

Using the 1-2-3 swing points from chart above once more, projected heights to 778 are highly possible if the rally continues. That also coincides almost perfectly with ES projections should both indexes ascend in relative unison.

Summation
FOMC meeting tomorrow is a big, big event. Traders will dissect every syllable of the release searching for words that suggest or confirm the rate hike is complete. Greenspan's finally will be trumped by every financial media forum around the world. Lastly, it is the final day of calendar month in a bullish environment where new money pours into mutual funds once again. A strong bias to keep the train rolling northward is certain to exist.

Today is a fundamental session for end-month window dressing to take place. Ramping the last session tomorrow would be blatant, so the funds often use next to last monthly session for power buying to paint the tapes. This afternoon has high potential to break upwards into the close, unless something happens on a fundamental basis to thwart the usual pattern.

Could be a quiet one today, upside bias probable. Tomorrow afternoon might be explosive, but first things first before we turn attention to that.

Trade To Win
Austin P
www.CoiledMarkets.com
(Online video clip tutorials... open access)

Austin Passamonte is a full-time professional trader who specializes in E-mini stock index futures, equity options and commodity markets.
Mr. Passamonte's trading approach uses proprietary chart patterns found on an intraday basis. Austin trades privately in the Finger Lakes region of New York.