Here's why volatility is about to increase

Wednesday's session was one of dull consolidation. We made our money in the first 4o minutes of trading, and stepped aside to enjoy other things in life than staring at lifeless screens thru the afternoon. Two sessions left this week, with no directional or wide range events occurred as of yet, there is hope for a normal range / trend session by weekend's close.

ES (+$50 per index point)

S&P 500 failed at its daily pivot resistance twice, then chopped sideways in an upward coil to the close. "Rising in agony" is how it could aptly be described. If price action breaks above 1236+ on Thursday, she might be headed back up to revisit 1240s again. Failure to do that ushers in a trip south to 1218 or so.

ER (+$100 per index point)

Early failure at the pivot offered short side profits in the Russell on Wednesday, then it was a scalper's chop & flop from there. ER has 660.50 to contend with before 667 and higher is possible.

VIX

Volatility levels spiked to 16+ and 17 thru most of October, ushering in ideal day trading conditions. Sessions were rife with wild swings up & down or big trend moves directionally from open to close.

In November, volatility collapsed back to recent decades' lows range once again. Four days ago we see where VIX levels hit lower Bollinger Band two deviations away (green) value from its 30-period average (not shown). Price action has traded below the 10-day exponential average (blue line) for the past ten complete sessions and counting. Until this pattern breaks, sideways congestion and a fight for intraday profits will continue. Once VIX levels are on the rise again, big profits and trend trading will prevail again.

Summation
October index option contracts (European style) cease trading today and settle out in value on Friday's averaged open. Friday is the expiration of equity and ishare (American style) options. The next two sessions could be rife with some gyrational swings, may be wide-range or trend sessions overall. Next week's holiday event usually brings solid trading potential, with many pundits expecting the year-end rally to be launched. Sounds good to me. So does an extended decline. Just pick a direction and go... we'll trade it profitably either way!

Trade To Win
Austin P
www.CoiledMarkets.com
(Weekend Outlook trend-view section... 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.