There are only 2 possible outcomes from here
Wednesday’s session was one of rest for
the indexes. Price action limped a bit higher in the morning, then drifted along
in a small rolling range to the close. Other than the opening hour Tuesday and
outside catalyst of FOMC minutes interpretation, volatility remains December
dead. Signs point toward an end to this range bound condition… sooner than
later.
ES (+$50 per index point)
S&P 500 futures have next clear support near
1270 and everything above to recent highs near 1285 as myriad congestion.
Basically, the index remains sideways in a widening sideways range. That
portends directional breakout soon, perhaps inside the next week or three.
YM (+$20 per index point)
Dow futures have next support at 10850 on a
normal pull back from Tuesday’s stilt. A month’s worth of overhead congestion
must be cleared before 11,000 becomes support instead of resistance as it
currently is.
NQ (+$20 per index point)
Nasdaq 100 futures breached 1700, with the bulk
of current resistance from mid-November straight above.
ER
(+$100 per index point)
Russell 2000 futures face the same ceiling as
all other indexes do. The only thing Tuesday’s action accomplished was press
price action right back into the mess. 684 down to 678 are visible levels of
support should selling hit the air pockets beneath this index.
Summation
There can only be one of two possible resolutions for stocks from
here:
#1. Price action remains in this same sideways range until Jan 2007.
#2. Actual accumulation or distribution of stocks begins to happen, creating a
trend.
That’s it… those are the only possible
scenarios. There is no third choice for equity markets. Sooner than later, some
catalyst unknown to the markets right now (not interest rates) will emerge to
drive the tapes upward or down for weeks and months to follow.
For now, we await the arrival of that unknown
event. It’s a scalper’s market for intraday traders right now, and time of
patience for overnight swing traders. We’ve all seen this before, and we all
know that sideways markets lead to directional markets of equal time length and
proportion. The longer they coil, the longer that ultimate trend move will last.
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.