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TECHNICAL ANALYSIS


Flagged Day(s)

08/05/10 08:06:33 AM
by Austin Passamonte

Here's a short-term outlook for ES and TF emini futures.

Security:   Emini stock index futures
Position:   N/A

The first few sessions of August 2010 have been a stretch of congestive, consolidated, low-volume and small-range price behavior. The ebb & flow cycle of expansion and contraction is eternal ... and always about to shift from one to the other.

FIGURE 1: ES, HOURLY
Graphic provided by: TradeStation.
 
S&P 500 emini futures (ES) gapped open higher from Friday's close through Monday's open and continued slightly higher. Three consecutive sessions have wedged into a crisp pennant formation that is repeatedly testing upside resistance. A break and close higher should continue running. See Figure 1.

One troubling aspect for bullish players would be two (2) open gaps (Figure 2). The 1100 zone and then 1060+ zone are both beckoning for price to fill those holes. Considering the fact that volume in this three-day stretch has been some of the lightest seen all year means that those were not powerful breakaway trend-begin events — just an absence of sellers until proven otherwise.

FIGURE 2: TF, HOURLY
Graphic provided by: TradeStation.
 
Russell 2000 emini (TF) futures are holding inside a similar pennant formation, relatively lower than the ES. See how the ES is trading slightly above prior swing highs from the late July peak? As this time, the TF remains slightly below the same swing high peak itself.

In addition, TF filled the Friday to Monday gap below next session while ES held dead-flat all day. Usually, when one stock index market fills a gap while the other(s) does not, it isn't very long before they both follow suit. In this case, there is a probability that ES 1100 fills before significant continuation higher persists. Upside breakouts must be respected and traded; downside breaks will most likely fill one or both gaps. Clear-cut lines are in the sand either way.



Austin Passamonte

Austin is a private trader who trades emini stock index futures intraday. He currently trades various futures markets from home in addition to managing a trader's educational forum

Title: Individual Trader
Company: CoiledMarkets.com
Address: PO Box 633
Naples, NY 14512
Website: coiledmarkets.com/blog
E-mail address: austinp44@yahoo.com

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Date: 08/10/10Rank: 5Comment: 
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