2006 is off to a great start
Friday’s session was a breakout of the
recent sluggish range on solid volume. We’ve been awaiting such an event for
quite some time now, be it higher or lower prices. It is not our job to care
which way the markets head… that is a variable we are powerless to control.
The only factor traders can control is how they react to market action confirmed
on the charts, and right now we see some decisive action just getting underway.
S&P 500
After nearly six full years since hitting its all-time historical highs,
S&P 500 is threatening to break and close above 62% of that retracement on
a monthly basis. Now, it has bumped this very critical level for the last
two months without avail. We won’t know the outcome of this third try
until Punxatawny Phil climbs out of his hole and peers at the chart along
with us. However, this time upward is looking favorable for the bulls from
here.
It
should also be noted that for the first time since year 1999, commercial
traders in the S&P switched from net-short recorded positions to net long
late last year. These are the pension funds, institutions and biggest
financial banks. Such players in our industry are usually early getting
long and early going short… it is not a valid trade signal for retail
traders. That said, do not place any long-term bets to the downside until
(at the very least) weekly charts turn decidedly bearish, which of course
they are bullish right now.
NDX
Nasdaq 100 continues to climb its years’ long channel, has defeated the
1700 level for now and also threatens to close above 38% of its all-time
high to recent low retracement. Quite a big deal for the big-cap tech
index if it can pull off this feat by month’s end. Next overhead magnet
would be the venerable 2,000 mark looming above.
SOX
Semi-Conductors are leaving the four-year wedge pattern behind. From here,
570 and then 650 are the next two lines of demarcation for bulls to target
above.
Summation
Trend view is
now breakout and continuation moves for equity markets and their correlated
commodities. Two wild days of solid price action in stock markets this week,
sandwiched around two very lackluster days. Will the real equity trend please
raise a hoof? Or paw? In any event, we expect more of the same from all markets
next week & beyond.
Swing traders will be
buying dips to support and holding on for higher levels until that act ceases to
work. Intraday traders will favor the upside, particularly in sessions that head
lower off the open and then hold higher lows midday and/or sharp V-moves
following early weakness.
At long last, stock index
markets appear to be waking up. All major indexes and some key sectors along
with gold and oil are on the move. So are currency markets. 2006 is shaping up
to be one of the best trading years witnessed in the past several, and I’d opine
that stock traders ain’t seen nothing yet!
Trade To Win
Austin P
(Weekend Outlook trend-view section…
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.