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Emini Futures Outlook
Austin Passamonte
Happy New Year!
Globex futures took their first
opportunity to levitate thru Monday night. Common perception is for 2007 to pick
up where 2006 left off... rallying straight up with nary a pause. That may very
well happen, no one on earth knows what financial markets will do before it
happens. We can look back at history to see what may repeat itself in the
future.
Chart 1: ES (+$50 per index point)
Chart 2: ER (+$100 per index
point)
Jan 3rd 2006, all indexes were expected to pull back or correct sharply. A modest dip in the morning of first session one year ago soon erupted in a massive rally. Fade traders who insisted on shorting into each pause of the lift got their heads handed to them... while creating most-welcomed liquidity to those of use who trade in harmony with market flow :>)
Two things to note here: price action began in the direction expected, but staged massive reversals to print large-range session moves.
Chart 3: ES (+$50 per index point)\
Chart 4: ER (+$100 per index
point)
Jan 3rd, 2005 was similar in a sense. Price action sold off hard from the open, posting rather large-range moves relative to what had been recently seen in December 2004. Once again, traders trying to fade the big move while buying levels of perceived "support" got crushed. Those who play the double-down game trying to catch tops or bottoms in days such as these get turned under like dried cornstalks beneath a twelve bottom plow. Wrong way to trade, for sure.
Summation
Along with a shortened week and first trading of 2007, we have numerous
market-moving econ reports that should keep things roiled all the way. Today's
FOMC minutes at 2:00pm est have potential to shake tapes into the closing bell.
Ditto for reports Thursday & Friday, especially that non-farm payroll voodoo on
Friday.
If recent history repeats itself, we should enjoy a large directional push today. That may be in one direction all session, or could reverse sharply without warning akin to last year. I'm a buyer or seller off the open in aggressive fashion, will try to hold trades for big gains if possible. Whether they take 'em up or down in the end, it should be a swingin' good time either way.
We'll know much more about potential trend development this weekend. The next three sessions are widely watched for market direction forecast. "As goes January, so goes the year. As goes the first week, so goes January". Get ready to hear that old adage in financial news media more times than one cares to listen!
Trade To Win
Austin P
www.CoiledMarkets.com
[Online
video clip tutorials...
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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.
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