You can’t keep a good bull market down
Great Morning!
 The
past week’s financial market action was essentially more of the same: range
bound for the past three months and counting. However, the intraday ranges and
swings have expanded back toward near normal levels as averaged over the past
five years. Things are heating up as the markets roll sideways in search of the
next sustained directional push. Which way might that be?
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S&P 500 futures found an early bottom right on S2
values (solid green line), then worked their way higher above the S1 (dashed
green) and then daily pivot point (solid navy blue). Seems like they can’t keep
a good bull down: right when it appears markets are due for a correction, big
caps rally off each visit to the low end of their recent sideways range. More on
that in a bit.
Russell 2000 futures traded relatively weaker all
session compared to the other three emini index symbols. A quick drop below S1,
below S2 and staggered limp upward from the lows stalled out right at the
closing level of Thursday’s session. No one wanted to take any small caps home
for the weekend… big caps were invited to the party.
S&P 500 has spent the past twelve entire
weeks rolling sideways from 1250 to 1300, with most of that action confined to
1250 ~ 1275 actual range. Not a matter of if this will break, only when. Whether
the next big push is up or down, it should be an extended move that runs quite
some distance.
Weekly close below 1215 would be very
bearish indeed, anything less than a weekly close at new recent highs is merely
sideways congestion.
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Small Caps are the stalwart of stock
indexes. Above the 690 level remains full bull ahead. A weekly candle close
below that mark needs to be shorted into with gusto.
Summation
Trend view is
nonexistent. For the past three months and counting, stock markets have rolled
sideways in a defined range as visible in the weekly charts above. Those swings
are tradable, but it requires short-term holding periods and modest profit
expectations. For sure there have been individual stocks and some commodity
sectors heading directional, but the overall market index outlook remains range
bound.
When the ranges ultimately break, and they
obviously will, stock market action should make some substantial moves. Whether
that is a relatively brief surge up or down before the next range establishes,
who can say?
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We’ll start this session with a pending
gap-down open with Friday lows the first downside magnet below. With option
expiry week upon us, should be a number of potentially profitable swings to
play.
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Trade To Win
Austin P
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