Emini Futures Outlook
Emini Futures Outlook
Austin Passamonte
Weekend Greetings!
Price action in November withered
inside narrowing ranges while VIX levels dropped to decades’ lows. That type of
pall in price action cannot last forever… when one extreme is broken, markets
tend to swing towards opposite side of the fulcrum. The recent return of
volatility is built upon dip buyers eating every market drop like it’s the last
time markets will ever be this “cheap”.
Maybe that’s true, maybe not. Professional
traders do not succumb to the forecasting business: they trade what is seen
instead of what’s (emotionally) felt. Right now we’re seeing market action ala
December 1999, regardless of all else.
Chart 1: ES (+$50 per index point)
S&P 500 futures waggled both ways in the
premarket, traded up to clustered resistance at daily pivot (navy blue line) and
immediately sold off down to S1 value (light green line). From there the buy
programs kicked in, and dipsters pushed it up to new session highs near R1 value
(light red line) by 11:30am EST.
Plenty of profit potential for intraday swing
traders in both directions, and scalpers would have left too much money on the
table. Recent volatility spike following dead market conditions in November is a
most welcome return to normalcy!
Chart 2: ER
(+$100 per index point)
Russell 2000 futures traced the same technical
path from open thru the swings by midday. A $900 per emini contract move lower
was followed by a $1,100 per emini contract move higher. How hard is it to pull
$500 swings out of one or both? Not very… viva la volatility :>)
Chart 3: ES (+$50 per index point)
S&P 500 futures are projecting price objectives
1440s before next cluster of sell stops are found. These are levels we could see
by next Tuesday, before the post-fed meeting Wednesday where directional
probability is high. First, the 1430 level must be breached on a daily close
basis.
Chart 4: ER
(+$100 per index point)
Russell 2000 futures measure the same general
swing with 817 to 836 as primary objectives, 848 is not out of the question
before year’s end. Onward & upward unless otherwise thwarted.
Summation
Buy-side bias has become blatant. There is no dip that goes lacking for bids
very long. Any intraday dip is either erased before the closing bell or next
day, regardless of volume patterns or anything else. There are just three weeks
left until 2006 is in the books, and closing at/above current levels is most
likely scenario by far. Retail traders will wait until Jan 2nd to place sell
orders and book profits that generate a tax bill in April 2008. Fund managers
are printing their own bonus checks right now… under the circumstances, who
wouldn’t be motivated to resist selling efforts at all cost?
As an intraday trader with equal ability to
make money long or short, I have no bias or preference where price action goes
up or down. I do sincerely hope it goes somewhere, hopefully in trend fashion on
rising volatility. With no inherent need for price action to go one direction, I
don’t try to predict what might happen. Reactionary trading without bias or
expectation works best for intraday players… keeps the mind clear & prepared.
Next big catalyst ahead is the FOMC event
Tuesday. That followed by triple-witch expiry at week’s end leads to the last
couple weeks in December. We are entering a period where volume will wane and
tapes will rise almost assuredly. The next big drop is not likely to come until
January, if then. Sell signals work when given, but downside has been a struggle
more days than not. Be aggressive on the long trades, picky on the short trades
until New Year’s champagne has gone flat. Strong fundamentals now in play trump
what the market would like to do versus what will be forced upon it.
Trade To Win
Austin P
[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.