Be alert for some volatile swings today
Wednesday’s session was a gap-down open
event, of course. Earnings news, Japan’s trading exchange woes and stock markets
jacked up on stilts all led to a -10pt ES futures open from the closing bell
before. That kind of “kick in the pants” is exactly what intraday players live
for!
ES (+$50 per index point)
S&P 500 futures opened right on S2 values
(green line) to begin the day. More importantly, our chart tools were on 100%
buy signals off the bell. Longs from 1281 area worked their way upward to the
magnetic pull of daily pivot point (navy blue line) to 1288 for easy swing trade
profit potential. Scalpers could have been in & out a couple of times, buy-side
bias all the way.
From the pivot point tap we had 100% sell
signal confirmation and called that in the room. A secondary sell signal near
1284 also presented itself in the best leg of this day. Lastly, continuation
sell signals below S2 confirmed by key chart tools all led towards profit
potential to 1276.75 lows for the session.
By 1:30pm EST, what more could intraday traders
ask for?
Afterwards there were buy signals from 1280 in
the rise toward 1284 off Beige Book blather and buy signals near 1280 on the
final pull back & pop of final hour. But why be greedy? With a first half
session like we enjoyed, enough is enough for anyone.
ER (+$100 per index point)
Russell 2000 was a buy-on-open signal called in
our educational room. That actually gave several long entries on the way up to
its pivot point magnet, a value that is hit roughly 70% of the time inside
pit-session hours. Did you know that mathematical fact? Stock index markets come
within 1/2 point of touching their daily pivots +/- 70% of sessions over the
course of time. When price action is headed that way, odds of fulfillment are
strongly in your favor.
We knew better than to short the first touch of
ER’s pivot. For all anyone knew, price action could have blasted straight on
thru to R3 values right from there. But this time it didn’t. Weakness was
confirmed, short signals valid at 707 resistance confirmed and subsequent sell
signals popped up all the way down this chart.
Buy signals for valid scalps ended the day,
which in itself was a rather muted range and directionless. But the swings were
highly predictable using correct trading tools and opportunity for at least one
profitable trade overall was clearly there.
ES (+$50 per index point)
S&P traded down to its 50% retrace (solid green
line) of 2006 rally and found willing buyers right there. Now we’ll see what the
markets have in store for themselves next. First apparent resistance is 1286 and
then 1292 via bearish retracement grids from recent highs to yesterday’s swing
low. A break thru both clears the way for continual new highs ahead. Stall-out
at one or the other will bring in aggressive short traders, myself included for
swing trade potential opportunities.
ER
(+$100 per index point)
Russell 2000 futures did not retrace to any
support level of its 2006 rally. Snapping a similar bearish grid from highs to
yesterday’s low has price action ready to prove itself at the key levels right
away. Should see a resolution soon, which could very well break the next big
directional push to come.
Summation
January index option (European style) contracts cease trading at the
close today and settle in value upon Friday’s averaged open. Equity options
cease trading tomorrow. These two option expiry sessions can and usually do have
some unusual price swings due to option-related position squaring and/or
influence. In other words, we might see some weird things happen in the tapes.
Look past all of that and stick with your method signals… markets have
potential for profitable moves every day. It’s our job to stand ready when
opportunity presents itself, and act accordingly as our chart tools suggest.
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.