Did Monday’s break-out signal an end to the intraday range?
The month of September
has been one of contracted volume and intraday ranges for emini markets.
Might Monday’s upside breakout ended that, or was it just the usual end-month
price action antics?
S&P 500 futures gave a buy signals above their
daily pivot, R1 and R2 values after bouncing from S1 levels. These floor trader
pivot levels were relatively narrow due to the previous session’s no-range span.
Regardless, price action honored them in technical fashion.
The opening dip to low levels of support were met
with two big spurts of program buying. This is very distinct in that price
action explodes out of coiled patterns in surge fashion and immediately pulls
back once the programs kick off. What used to be measured, stair-step ascent or
decline years ago is now more often coil & surge, coil & surge type behavior
with prevalence of programs and their volume.
Russell 2000 futures likewise gave buy signals
above its daily pivot and R1, in lagging fashion versus the S&P. More on that in
a bit. By comparing size of candles and relative distance covered, small caps
lagged the ES on its way higher. That’s a pattern which has repeated quite a bit
over the past few months… small caps and tech are not leading the S&P = Dow as
they had for the past few years.
S&P 500 futures are trading right back to
multi-year highs marked earlier this year. The Dow is also within one big
session’s move of new all-time highs. We should expect to see those marks
breached real soon, probably before week’s end to promote a favorable third
quarter’s end. Upside definitely has the nod all week long until proven
otherwise.
Russell 2000 futures remain relatively weak by
comparison. Whereas the big caps are pressing record highs, small caps are not
even close to those same respective levels. I’m not sure what this means for
long-term market prediction: we’ve seen this divergence for several months now,
with no change in uptrend yet. Common logic suggests broad market action cannot
hold high ground without small techs & semis leading the way. I’m agnostic about
all that, time will surely tell as it always does.
Summation
This week’s economic calendar has a spate of mid-level reports out at 8:30am and
10:00am most days. That’s enough to keep those tapes churning, with fundamental
upside pressure into the final hour of trading on Friday. When in doubt, favor
the upside and guard profitable shorts cautiously. The strong tendency of upside
bias into month’s end is accentuated now as we mark the 3rd quarter finish to
boot.
See you again in Thursday’s report!
Trade To Win
Austin P