OTF and Intraday Charts

Ho Ho Ho

The Santa Claus rally arrived in full force last week as the Emini exploded higher, hitting a number of completion targets. Volume was light as expected, making it easier to manipulate.(Left click on charts to enlarge them.)

Swing Trading

Mastering the Equidistant Swing: A Trading Strategy Inspired by Physics and Play

In the world of technical analysis, few concepts capture the rhythmic nature of markets quite like the equidistant swing strategy. Often rooted in the “action-reaction” principle, this approach draws from Newton’s third law: for every action, there’s an equal and opposite reaction. In trading terms, it means price movements tend to mirror each other in magnitude, creating predictable swings that savvy traders can exploit.

Think of it as the market’s way of balancing forces—upswings countering downswings, and vice versa.To make this vivid, imagine a classic kid’s toy: the paddle with a ball attached by a rubber band. You hit the ball rhythmically, and it bounces back each time, maintaining a steady equidistant swing. But what happens when you miss? The ball’s momentum carries it beyond the paddle, overshooting in the opposite direction. This “overshoot” is the essence of the equidistant swing in trading.

Markets don’t always stop at equilibrium; they often propel further due to momentum, fear, or greed, creating opportunities for projection.The strategy works by identifying key pivot points—highs, lows, or significant levels like yearly opens—and measuring the distance of a swing. You then project an equal distance in the opposite direction for a potential target. It’s simple yet powerful, often used with tools like Fibonacci extensions or median lines (à la Alan Andrews’ action-reaction lines). For instance, if a stock drops 10% from a high, you might anticipate a 10% rebound from the low, or even an extension beyond if momentum builds.

Let’s apply this to the E-mini S&P 500 futures (ES), a benchmark for U.S. equity markets. As of the 2025 yearly open at 5949.25, the index experienced a notable pullback, hitting a low of 4832. That’s a downside swing of 1117.25 points—a classic “action” phase driven by economic jitters, perhaps inflation data or geopolitical tensions.Now, the “reaction”: using the equidistant swing, we project an equal move upward from the yearly open. Adding 1117.25 to 5949.25 gives a potential target of 7066.5. This isn’t just wishful thinking; it’s grounded in historical patterns where markets reclaim lost ground and push further, much like that paddle ball swinging past the paddle after a miss.

In bull markets, such projections often align with broader trends, amplified by institutional buying or positive catalysts like rate cuts.Of course, no strategy is foolproof. Risk management is key—use stops below recent lows, monitor volume for confirmation, and watch for divergences in indicators like RSI. Combine with fundamentals: if earnings seasons surprise to the upside, that 7066.5 target could materialize sooner.In essence, the equidistant swing reminds us that markets are dynamic, elastic systems. Like the rubber band on that toy, prices stretch and snap back, often with extra force. For traders eyeing ES in late 2025, this setup suggests upside potential amid recovery narratives. Stay vigilant, measure your swings, and let the action-reaction principle guide your trades.

Who knew a childhood game could unlock market secrets?

Our Edge

Time and Price

“The point is not so much to buy as cheap as possible or go short at top price, but to buy or sell at the right time.”

-Jesse Livermore

Math is not a four letter word