Here’s How To Trade Today’s Market…
Premarket futures are poised to start
today in red. As we’re all aware, that has usually been followed by dip buyers
swooping in to take the tapes higher by session’s end. After three straight
sessions of extremely low ranges with no directional breaks, there is a strong
chance for significant swings up or down before Friday’s closing bell rings.
ES (+$50 per index point)
Wednesday the S&P 500 gave a sell signal at its
daily pivot, buy signal just above the pivot near 1244 and another buy signal
near 1244. Considering it was a 6pt total range day, nothing measurable
happened.
Thursday has 1246+ as bullish breakout
territory and 1244 as bearish breakdown territory. Remember, these lines on the
chart are not considered broken until at least one bar/candle closes on the far
side of either value. A quick tail poking thru is not enough… just a stop-run
move to catch the momentum crowd leaning wrong way, as usual.
NQ (+$20 per index point)
Nasdaq 100 mirrored the S&P in every way. Sell,
buy and buy signals that went absolutely nowhere. Scalpers had chance to pick
off a bit of lunch money in these swings, but nothing close to a normal range
session here.
Break & close above 1631 or break & close below
1628 are the zones to lean long or short respectively. NQ is so flat these days,
I personally never attempt to trade it. That said, this type of tight coiled
action is brewing a sharp directional move up or down real soon.
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YM (+$5 per index point)
Dow Industrial futures opened “in the hole” and
clamored their way upward into the closing bell. A couple of buy signals didn’t
offer much… possibly +30pts each way. Not exactly what I’d call a stellar day,
but such are conditions we’ve worked within this week.
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ER (+$100 per index point)
Russell 2000 futures gave a sell signal, buy
signal and then a sell signal late-day on pivot failure that also worked as a
1,2,3 sell below the redline near 685.80 or so. For those of you familiar with
1,2,3 pattern trading, there is one example. Selling the (presumably) #2 point
on the swing (purple arrow) when lower high appeared worked for about +$300 per
contract.
I did not take that trade… had already shut
down for the day with +4pts and protecting hard-earned gains in the third day of
comatose price action. I did watch it unfold, and wished I hadn’t been so stingy
with my day’s profits!
{Price levels posted in charts above are
compiled from a number of different measurements. Over the course of time we
will see these varying levels magnetize = repel price action consistently}
No Real Reason
Many traders are complaining about lack of volatility in stock markets. Some
are labeling it “summertime markets” as reason for low volume, miniscule range
sessions. That may be part of the cause, but we’ve seen this type of action more
often than not for a long time now. A week or so of directional bursts and
“normal” range movement gives way to couple weeks of sideways mush and
contracted ranges.
I don’t know where the end of all that lies,
nor does anyone else on earth. Stock index markets are not easy to trade right
now… they are unforgiving of mistakes. During normal to high volatility
periods, plenty of viable entries come along each day. Miss or muff a few? No
big deal, plenty more chances to get it right.
That isn’t the case today. We get fewer trade
setups and fewer directional moves to harvest profits from. Not a big problem
for me, as I play in the currency markets as well. They are what stock indexes
used to be: trending overall with large swings more days than not.
My advice? Trade the first two hours and last
two hours of a session, avoid the midday coils. The only time I play midday
stock markets now is when the morning has been active = directional. other than
that, consider the 6.5 hour live session as three completely different parts,
both ends tradable with the middle period best to avoid.
Trade To Win
Austin P
free pivot point calculator, much more inside
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.