Index action looks highly suspect here

The holiday session went
as one would expect…
quiet, low volume and a general upward drift.
October has been a month of substantial declines and/or market bottoms in the
past. Might this one finish in marked fashion, or will the early doldrums of low
volume and waning volatility continue?

S&P 500 gave an early sell signal and then
reversed soon after for a buy signal, coincidentally at the daily pivot point
value. Long side worked for barely +4pts, downside didn’t cover more than +2pts
before coming back up thru entry. The S&P was locked in a very small range
again, which has been pervasive for some time now.

Russell 2000 futures likewise gave a quick sell
signal that covered more than +3pts, then reversed to a buy signal which covered
more than +5pts the opposite direction. As usual, there was much greater range
of travel in the small caps intraday.

S&P 500 futures have spent the past three
sessions consolidating last Wednesday’s big gain. Initial support lies between
1347 and 1337 before 50dma near 1324 at this time. Upside is the trend, higher
yet has the nod, a body in motion tends to stay in motion, etc.

Russell 2000 futures continue to trade more of a
sideways fashion than bigger caps. The ER is going up, but under protest.
Exaggerated swings in this rolling range pattern since mid-August are indicative
of internal weakness instead of strength. Markets that are strong consolidate,
build bases and push higher. Markets that are weak roll sideways in expenditure
of energy before they either consolidate and push upward, or merely collapse.


Seems like half the market forecasts we see call
for continued upside with no worries, and the other half predicts imminent
topping and/or potential outright disaster for stock markets. While it’s fun to
predict & project what may happen, those attempts are seldom fruitful over the
course of time. Having a directional bias or opinion is no advantage for pure
day-trading… it is an albatross.

Expecting price action to go up or down over the
course of time is one thing. Projecting those expectations on a daily basis will
slay an intraday trader sooner than later. Some of the easiest, most profitable
sessions to trade intraday are short squeeze rallies in a downtrend, or steep
selloff corrections in an uptrend.

Intraday traders must focus 100% upon what is the
trend at this moment in time, which can change one or more times
between the open and close. Perhaps the toughest thing for intraday traders to
make peace with is a lack of planning or forethought under live fire. It is
perfectly fine to have some predetermined trade plans heading into any given
session, but it’s vital to have ability for tossing them all aside and correctly
reacting to a change in price action or behavior in real time.

So… index action currently looks strange, even
highly suspect to me. I cannot understand how big caps will continue to lead
higher while small caps techs lag behind. But… that’s what we’ve seen for
months on end, and upside has been where most of the profits have been at. Keep
an eye on the intraday timeframe filter chart for pure intraday trading, and
whatever happens over the longer term will inevitably sort itself out, one day
at a time.

Trade To Win

Austin P

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.