Friday's session began
with a Globex rally several points above fair value. The GDP report
at 8:30am kyboshed that, but it wasn't too long after the cash session opened
that shorts were squeezed in powerful fashion once more.
After the morning squeeze ended with similar
suddenness as it began, price action drifted & fluttered sideways to lower from
there. A pattern we've seen repeated over and over again in the past two years:
stealth rally, short squeeze rally, rising in agony... label it as one will.
Regardless, the major indexes closed the week higher than they opened despite a
"drunken crow" flight pattern to get there.
20dma
30dma
50dma
ES (+$50 per index point)
S&P 500 futures remain bullish after a choppy
week upwards in direction. Previous Friday's (1/20) red surge candle that
powered lower was followed by four ugly "doijs" of various description and
capped by last Friday's opening bell short squeeze.
Support comes in near 1280 initially, followed by
1276+ and then slightly lower. Next resistance is recent highs from Thursday
1/19 and then four-year highs near 1300 from 1/11.
ES (+$50 per index point)
Using swing value points 1-2-3 from the chart
above, projecting Fib values into the future shows 1344 as a viable upside
target before significant selling might cap things off. We could see a push to
those higher levels sooner than later if this upside lurch continues.
ER
(+$100 per index point)
Russell 2000 futures are the power train to this
current rally. The small caps (and to slightly lesser extent) mid caps have been
heading upwards in bullish, methodical fashion. This daily chart of the ER shows
light support near 725 and stronger support at each grid level lower. Price
action is stretched way above MA values, which usually resolves in a market
moving sideways to lower until the twain meet once again.
ER
(+$100 per index point)
Using the 1-2-3 swing points from chart above
once more, projected heights to 778 are highly possible if the rally continues.
That also coincides almost perfectly with ES projections should both indexes
ascend in relative unison.
Summation
FOMC meeting tomorrow is a big, big event. Traders will dissect every syllable
of the release searching for words that suggest or confirm the rate hike is
complete. Greenspan's finally will be trumped by every financial media forum
around the world. Lastly, it is the final day of calendar month in a bullish
environment where new money pours into mutual funds once again. A strong bias to
keep the train rolling northward is certain to exist.
Today is a fundamental session for end-month
window dressing to take place. Ramping the last session tomorrow would be
blatant, so the funds often use next to last monthly session for power buying to
paint the tapes. This afternoon has high potential to break upwards into the
close, unless something happens on a fundamental basis to thwart the usual
pattern.
Could be a quiet one today, upside bias probable.
Tomorrow afternoon might be explosive, but first things first before we turn
attention to that.
Trade To Win
Austin P
www.CoiledMarkets.com
(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.
