Predicted Calm Before the Storm

All four pit sessions this week for CL were similar: extremely narrow range, stuck to or pinned inside the 5-minute open range (yellow shaded) zones and practically zero movement either direction. That was true from 9:00 AM EST on Monday through 2:25 PM EST on Thursday.

With five (5) minutes left to go in today’s pit session or trading, someone(s) sold 17,000+ contracts in that final five minutes to the bell. Price plunged -150 cents to create by far the widest price swing all week. Continued selling past the close drove price action lower.

Who, what and why are the usual questions everyone asks. With an average volume run of about 2,500 contracts per 5-minute bar, someone obviously had plans for the close well ahead of time. I wouldn’t imagine that was some sort of random impulse trade. Would you? Welcome to the often extreme, sometimes wild, occasionally violent world of CL.

This is the type of behavior you see during the final two weeks of August and again in December each year. This is normal, seasonal behavior…albeit maybe a bit extreme on the sideways lull part for CL. We can expect a return to more normal volume distributions and price oscillations to come next month.

On the stock-index side of life, E-mini markets traded like a boss three days out of four. Yesterday was choppy and congestive, today like the prior days were ranging, oscillating and plenty of trade signals that worked.

Other than one week back in 2011, late August seasonal patterns are pretty much what we’ve seen this time around. We know for sure that the upcoming FOMC event in mid-September will usher in volatility and movement. We also know that October is traditionally one of the most active market months. So we know what inevitably lies ahead.

Monday September 9th and onward can be counted on for the start of fall trading season. Meanwhile, the end of summer and its seasonal absence of traders is coming to an end.

For more daily updates from Austin, visit his blog at Coiled Markets.