Investors never cease to amaze me
Following Tuesday’s
swoon, stock index markets have drifted sideways for the most part.
Next Tuesday brings the first non-Greenspan FOMC event in a couple of decades,
along with fervent hopes of any hint that rate hikes will end soon. That coupled
with end-month and quarter session on Friday could have support pegs in place
for at least the next six sessions to come.
ES (+$50 per index point)
S&P 500 futures are holding light support of
their latest lo-hi swing. Two consecutive inside sessions show the indecision
that still reigns.
ER
(+$100 per index point)
Russell 2000 futures remain the strongest index
relative to all others. When in doubt, buy the small caps appears to be overall
market bias for now.
NQ (+$20 per index point)
The Nasdaq 100 daily chart is weak at best and
bearish in all reality. Price action has clearly traded thru 62% support of the
recent lo-hi swing on Tuesday’s drop and failed at former support now turned
resistance since. Until it can crack back above the 1730 level again, weakness
prevails.
YM (+$10 per index point)
Dow Industrial futures are on paused on the tear
upwards. Tuesday’s engulfing candle has been followed by two inside sessions
hence. This narrow index remains 100% bullish above 11,100 where the 50pma
currently rests. Several layers of light support between here and there exist as
well.
Summation
Market historians look to periods past where rate hikes ended and stock markets
soared. I’m not sure how many of those points in time included stock index
levels near years’ long and in some cases all-time highs. I myself have an idea
that this time around, when interest rates stop rising there might be a
different broad market reaction than the past. Why are stock markets trading at
extreme high levels in this extended bull run? Partly if not mostly because an
end to the dragged out rate hike procession has been anticipated (aka priced in)
for many months now.
If indeed market buyers have been anticipating
the inevitable end to rates hikes and therefore front-running the obvious event
to come, who is left to buy it higher once the news becomes known?
Stock market investors never cease to amaze me in
their belief that they are getting in “early”… that plenty of other “sheeple”
are flocked behind them without the good sense to get in now. Guess what? The
news about rate hikes ending has been out for nigh on a year now. Many Joe &
Jane investors have already gone all-in long ago. The next two earnings cycles
will hold far more impetus on market trends than when exactly rates will level
off. Keep the earnings parade going, and stocks should do fine. Let the earnings
tail off, and we can flip back to the charts of 2000 and 2001 for what will
happen next.
Trade To Win
Austin P
(Online video clip tutorials…
open access)
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.