Once again, I can't for the life of me figure out whether it's the bulls or the bears who are more frustrated with this market. The current market is fantastic for day timeframe traders entering and exiting each session in cash. But anyone trying to hold a position, regardless of direction, is likely pulling their hair out. The bottom line is we continue to navigate an exceptionally low-confidence, yet balanced market. And if you aren't willing to fade the edges of composite balance, take profits quickly and losses even quicker, this is probably not a market you should be participating in.
Before we get to Monday's regular session E-Mini S&P 500 futures (Es) trade plan, I want to shine a light on the continued lackluster performance of the iShares Russell 2000 ETF (IWM). We've spent a considerable amount of time in the Trader Daily discussing the relative weakness in biotech, momentum and small-cap names. And given Friday's bullish reversal in the Powershares QQQ Trust (QQQ) and SPDR S&P 500 Trust (SPY), I believe it's important to point out that the IWM barely rallied on the session. Sure, it finished in the black. But it closed at approximately the same level it was trading at just 15 minutes into day session. Hardly a rip-roaring rally.
Like the SPDR S&P Biotech ETF (XBI), my bias on the IWM remains toward the short side, as long as it continues to close beneath its short-term exponential moving averages (either five-day or eight-day EMA). As always though, I'd rather be a seller into strength then on breaks.
Moving on to Monday's Es auction, day timeframe traders should begin the session by recognizing the blunt appearance of Friday's profile. The bluntness of Friday's profile is an indication that upside excess failed to be achieved. With that in mind, our initial area of interest will be 2105.50-2107.75. Any continued bullish extension will likely hinge of shifting day timeframe value above that roughly two-handle zone.
S&P 500 Futures -- 10-Min Volume
Source: eSignal
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Failure to sustain a break above 2105.50/2107.75 doesn't return an edge to the bears, but it does increase our odds of slipping back down toward Friday's 2097-2095.50 low-volume area of rejection. A probe of that area would be expected to attract dip buyers, with only value migration beneath 2094.50 serving to discourage their participation. As far as giving the bears a meaningful edge, only a value migration back beneath 2084 will accomplish that.
Additional Notes:
1. Setting aside the fact that gold futures continue to trade poorly, I wonder how many traders realize Newmont Mining (NEM), the third largest market cap gold miner behind only GoldCorp (GG) and Barrick Gold (ABX), is less than a dollar from breaking out to a new 16-month high. After breaking to multi-year lows in late-October 2014, buyers miraculously reappeared and have been supporting the stock ever since. The bottom line is, a weekly close above $27.40 will be a nice-looking breakout. With a little help from gold futures, it should serve to attract a new wave of trend-following buyers to the bid.
2. Having been asked for an updated opinion on Twitter (TWTR), all I can say is the stock is technically broken. Put another way, I see very little to base a long bias on. Worse yet, I continue to see more traders wanting to bottom-fish the stock than cast it aside. I'd rather see sentiment turn sour and the stock be thrown overboard. Perhaps then we could look for some sort of short-lived bounce. If you rely on technicals to guide your trading, as I do, move along and give this one time to settle down.
Any trading or volume profile related questions can be posted in the comments section below, emailed to me at parkcityyeti@gmail.com or posted to my twitter feed @ByrneRWS.
At the time of publication, Bob Byrne had long positions in NEM, GG.