Here’s the game big money’s playing — Don’t fall for it!
Yesterday’s session continued Tuesday
afternoon’s dumping of stocks. That said, it was a day of sell offs and buy
programs that popped tapes higher only to be met with accelerated selling into
those rally attempts. Bigger money was selling than buying, that’s for sure. My
trading partner Russ aptly described the intraday action as “trappy”… gave the
outward appearance several times of pending short squeeze to upper resistance
levels, but each buying attempt trapped bulls when sellers dumped into those
lifts with impunity.
Let’s widen our view a bit and see where the
next bottom (or pause) may lie in the weekly charts posted below:
ES (+$50 per index point)
S&P 500 appears headed towards 1207 and then
1192 should the first target fail to hold. We could easily see the first target
hit today on any further weakness into the session.
MD (+$100 per index point)
S&P 400 midcap index has dropped -$2,000 per
emini contract in three sessions, erasing the previous three weeks of upside
gain. When hot money rushes for the exits, sell-offs can be dramatic.
696 and then 681 are the two visible downside
targets from here.
YM (+$5 per index point)
Dow Industrial futures have 10350 and then
10180 as trendline support targets below. This week’s candle still in formation
spans a two-week range that matches the previous two weeks from highs to lows.
In other words, the past month has been one big sideways roll… same overall
pattern since March ~ April of this year. Something is due to break directional
sooner or later, it goes without saying.
ER (+$100 per index point)
Russell 2000 futures are very near initial
support in the 648 area. If that fails to hold, look for 630 level to be the
next magnet of congestion below.
{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}
Summation
The last two rallies have come on heels of London bombing and
Hurricane Katrina. With Rita now threatening a wider region in the gulf, will
this week’s drop turn to a bounce from recent lows into next week? Will the
reported pattern of FOMC reactions statistically reversed play out again this
time around? Only time can tell the tale with benefit of hindsight. One thing we
do know for sure: no financial market is capable of going up, down or sideways
forever. Stock index markets have been going upwards or sideways for the past
two years, and that cannot last forever.
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.