Buzz-saw Action In The S&P 500!

It has been an interesting day for the U.S. indices and the very definition of “whipsaw” market conditions. As I mentioned in an earlier update, the Senate vote on the Trump tax plan has hit a snag, giving markets reason for pause. It is now coming across the wires that ex-Trump administration aide Flynn has decided to cooperate with federal investigators in the Russia-election probe.

These two news items have the S&P 500 and DJIA in a furious game of tug-o-war. After a muted open, U.S. indices tanked on the Flynn news, and are now posting a comeback.

Charged news cycles move markets, it is as simple as that. Implementing risk controls and a live news feed are all we can do to protect ourselves.

S&P 500 Technical Outlook

Who knows what is going to happen next? In my estimation, very few. But the market will figure things out, just give it time.

December E-Mini S&P 500 Futures, Daily Chart

Today’s range in the E-mini S&Ps has been huge, 149 ticks. A few observations:

• The whipsaw action to the bear has undoubtedly taken out a bunch of position longs. There were a high volume of stops run under yesterday’s low.

• A test of November’s 38% Fibonacci retracement has failed, with buyers protecting this level staunchly.

• The December E-mini S&P futures contract has traded with enormous volumes, nearly 2 million for the session.

Bottom Line: The U.S. indices are chaotic right now. It would not surprise me to see the S&Ps end up closing positive for the session after a wild ride. As of now, the picture is unclear, which makes it a no-fly zone for this trader!

If you have made some money in this market, well done! If not, remember that next week is always the best week.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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