More downside is probable today

Tuesday’s session was almost straight
. Led by small caps and technology, there was never any attempt to rally
at all. Long trades were obviously out of the question with short side dominant
from mid-morning on. So much for end-year window dressing to begin the week.
That does not mean the funds won’t push the latter sessions hard to build their
bonus checks, but this market appears very top heavy and overdue for a fall.

ES (+$50 per index point)

S&P 500 worked down to its daily pivot support
and promptly dove right thru. From there it was two steps lower until a close
right near session lows. A 16pt intraday range is perfectly normal from late
1999 to early 2003, but unusual lately with VIX near single digits. Get used to
seeing days like this again… 2006 will likely be filled with them. Those
4.75pt total range ES sessions will sooner than later be a thing of the past.

ER (+$100 per index point)

Russell 2000 broke down earlier than the S&P,
giving a couple of confirmed sell signals near 689+ before selling off to lower
lows itself. NQ acted exactly the same… techs & small caps are leading the
downside in selloffs and lagging upside in rallies for the past several weeks.
Ominous sign for those convinced there is nothing but blue skies above for

This Session:

ES (+$50 per index point)

S&P halted at its first magnet of support
nearly to the exact tick. Coincidence? Hardly.

If this one breaks, 1254 and especially 1245
levels are next in line. If not seen this week, the odds are very high for those
levels to be traded early next month. The day’s candle engulfed four previous
sessions that chopped their way higher in agony. What goes up with reluctance
certainly comes down with gusto!

ER (+$100 per index point)

Russell 2000 painted a big red candle back
toward previous support. 677 and then 672 are the next stopping points of public
interest below.


Three sessions remain for the year. Buyers were completely absent
yesterday, as the market fell beneath its own weight. At least one downside
swing this morning is highly probable, and could be the day’s trend as well.

Trade To Win

Austin P

(Weekend Outlook trend-view section
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.