Take only the clearest setups
Big cap stocks remain
market leaders while indexes rise as volume declines. Monday’s
mystery futures pop in the overnight hours was retested (as usual) intraday
during another straight-up, program driven rally session. Following two previous
sessions of micro-range congestion, a breakout move was widely expected. It came
during the first hour of trading, with a remainder of that session mostly
sideways from there.
S&P 500 gave aggressive buy signals off the open
when it held S1 values at the low. From there, further buy signals were
confirmed near the daily pivot point (navy blue) and again in the late afternoon
on a pull back to R2 and several other measures of support in confluence.
A 14pt intraday range is back to normal… not
large by any means of measure, but certainly better than the 6pt ~ 7pt non-range
sessions leading up to this. The time will come when ES sessions average 14pt
ranges with wide sessions spanning 28 to 30+ points from high to low intraday.
Count on it… probably to come in 2007 straight ahead.
Russell 2000 futures were much more muted than
the S&Ps. Early buy signals offered solid profit potential, but did not reach
the comparative peaks that ES did. In addition to that, ER staged a modest
selloff in the same stretch that ES pulled back into layered support.
Overall it was a big-cap party led by WMT and ilk
while small caps and techs limped along in sympathy.
Summation
Tuesday is the classic tweener session with FOMC
news release due Wednesday, and then the obligatory econ-data drivel slated for
last two sessions of this week. Today’s session might be another low-range
consolidation event, so let’s be sure to take only the clearest trade signal
setups.
The past several FOMC events have been pretty
poor trading action after the news. Unless the markets are surprised by the Fed,
they tend to chop sideways in coiled fashion from 2:15pm to the closing bell.
Unless something other than “no policy change” is announced tomorrow, the best
trading action to come is likely on Thursday and/or Friday.
Once this FOMC event has passed, all eyes turn
toward the November elections for stock market reaction. Pass that hurdle, and
we’ll see what the next illogical excuse will move financial markets up, down or
sideways into year’s end.
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.