Be prepared for a strong close
Monday’s session saw the expected
correction we spoke of in our pre-market report. That was hardly the gift of
clairvoyance on our part: price action was stilted straight to the sky on
decreased volume, a high-odds condition to correct sooner than later. What we
saw yesterday was the mirror image of an oversold rally in the midst of a
persistent downtrend: sharp & severe intraday correction where all stop orders
layered in clusters got taken out via domino effect. Whether that expected
retracement is complete or has a bit more to go (as always) remains to be seen.
ES (+$50 per index point)
S&P 500 dropped thru its pivot point, gave
initial sell signals at 1268 ~ 1267 early and 1266 again at midday. Both trades
worked for an easy +4pts apiece if taken. A late-day sell signal at 1263 ~ 1262
also offered an easy +2pts, total of +10pt ES potential on three turns in an
expected downtrend day.
ER (+$100 per index point)
Russell 2000 was much tougher to catch on its
way down. The initial drop required a bit of “chasing” or momentum style
breakdown entries to grab the first +5pt swing. After that, another (aggressive
trader’s) sell signal from 677+ and final one near 674 finished the day.
This Session:
ES (+$50 per index point)
S&Ps failed at clear resistance and shed Wed ~
Fri upside progress. Back to last Tuesday’s session close, also at various
layers of light support. 1245 trendline level and 1234 value at the 38%
retracement are next two visible magnets below. If the correction here
continues, look for one or both to be hit real soon.
ER (+$100 per index point)
Russell 2000 has 670+/- and then 660 as areas
of attraction below. One or the other should halt this decline if it becomes
more than a single session event.
Summation
Tomorrow is the last day of this month. Today is the one where price
action usually ramps in the afternoon ala window-dressing antics by the big
funds. Early weakness is likely to rally strong in the afternoon. Early strength
is likely to chop around first or rally strong and then chop sideways in the
afternoon. Anything can happen inside any given part of a session, but today has
a strong tendency to close very bullish. We’ll play our chart signal’s bias as
always, with a bit of extra attention to the long side this afternoon.
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.