Here’s what alerts you of an explosive squeeze
Wednesday’s session was much the same
as last Wednesday: stock indexes got pounded to surprisingly new recent lows,
and the intraday swings covered three – four normal session’s worth of activity.
These are some of the wildest tapes we’ve seen since the VIX broke below its 30
level some years ago. To say that market speed has accelerated into fifth gear
is an understatement.
Yom Kippur today may have accentuated the
market extremes yesterday. Lots of extra position squaring ahead of the holiday
session today. Historically, a look back at past Yom Kippur sessions shows small
range, drifty action with the following days posting big surge moves off the
open and very active charts from there. With the past two Fridays being real
snoozers, might we see a quiet one today and wild one tomorrow?
ES (+$50 per index point)
S&P 500 cash index (for historical price
accuracy) shows price action closing yesterday within an index point of 62% this
year’s low to high swings. In addition to that, adding a Fib extension
from the most recent five-week swing has clustered price objectives in the same
Of course we could see the market drop to 1135
while oblivious to all else. That said, a lot of buy stops tend to cluster in
these areas where market trades right now. A snap-back rally of considerable
force, even if it’s just an intraday squeeze is highly probable soon.
ER (+$100 per index point)
Russell 2000 traded real close to its 62% of
year 2005’s current swing range and held yesterday. It also has projected target
objectives within a couple of points around this same general range. Bottom
line? ER has also traded right to clusters of various support measures of which
some (but not all) are shown here.
Please don’t mistake me for being
bullish… not at all. I am agnostic any market direction or bias for the sake
of my own trading performance. Market bias will kill a trader quicker than most
anything I can think of. I merely apply the chart tools and let that speak for
itself. The indexes are now at critical support layers after straight-down
selloffs to get there. While it may be probable to see new lows before this year
is out and more likely into next year, upside risk of an explosive squeeze does
exist and brews hotter each time they sell ’em off from here.
Trading long or short today as method signals indicate. Trading a bit
light in size out of respect for Jewish holiday and light volume conditions it
probably creates. Any early sell pressure today will prime the tapes for
explosive upside potential into the closing bell, even if it only lasts
Trade To Win
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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.