‘All systems go’ for upside continuation

Busy week on Wall Street ahead. Option
expiry events Thursday & Friday, with plenty of economic reports (drivel)
sprinkled in for good measure. Indexes have been mostly quiet for the past two
weeks on an intraday basis… this week might be anything but.

ES (+$50 per index point)

S&P 500 coiled sideways thru most of Friday’s
holiday session, limping upwards a tad in the final hour of trading. The day’s
micro-range on nil volume and lack of trader participation does give today’s
session plenty of kinetic energy to work with. Thursday’s low to Friday’s high
range gives 38% retrace a probable low price point today if hit.

ER (+$100 per index point)

Russell 2000 coursed a bumpier path, selling
off a couple of points in the morning and bobbing a bit midday before also
stretching toward session highs at the end. Similar to the ES, recent hi-lo
swing has 38% retrace as probable support on early weakness if touched. An early
ramp to new recent highs would negate this support factor should that scenario
happen first.

This Session:

ES (+$50 per index point)

S&Ps broke out of a sideways congestion and
closed above two trendlines of resistance as well. This 1240 level will be a
widely-watched test of recent highs before the October dip. Meanwhile, pull
backs to the boxed congestion zone should hold support there and if broken to
the downside, new lows are probable to be traded from there.

ER (+$100 per index point)

Russell 2000 lags the S&P and other big indexes
for the latest upward push. This is a bit odd, considering small caps have led
the rally for past three years since extreme lows of October 2002. If the little
index gets in gear and overshoots the big caps, upside continuation to new
recent highs is probable. If the small caps lag instead, we’re likely to see a
fizzled rally.


Option expiry and lots of econ reports this week should keep the
tapes shaking. No excuse for the bulls not to enjoy a year-end rally starting
from last week’s range breakout. All systems go for upside continuation, now
it’s merely a matter of playing the charts as long or short signals appear in
confirmation or deference to new index highs by Christmas.

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.