The Trader Daily: Buyers Show Signs of Fatigue

Tuesday had all the makings of another strong victory for bulls, but their forward progress was halted, almost without anyone noticing, around 2:30 p.m.

As you'll recall, we entered Tuesday's session with an eye toward buying dips as long as value remained above 2088.25. And while the lowest the E-Mini S&P 500 futures (Es) traded during the regular session was 2090.50, the contract did trade within three ticks of our downside line in the sand roughly 90 minutes prior to the day session's opening bell. In a nutshell, the only regular session dip buyers that managed to secure anything close to optimal trade location were those active immediately following the opening bell. That's because within a mere 50 minutes the Es once again was knocking on the big figure (2100).

The drive beyond 2100 began shortly after 11:30 a.m., and while this move triggered endless "fear of missing out" (FOMO) comments from the peanut gallery, very few noticed that value was not keeping pace with price. Indeed, up until the final 15 minutes of regular session trading, value remained at 2097.25 -- the same level it had been since around 11:10 a.m., and a mere tick above Monday's closing level.

Value eventually did shift higher, to 2103. And while the continued upward movement in value is bullish, the fact that price consistently slid lower from 2:30 p.m. into the close of regular session trading is, in my view, a problem for short-term bulls. Contributing to my obviously less-than-enthusiastic impression of Tuesday's auction is that price has weakened into the close two days in a row. This is not something we typically see when participants are scrambling to add exposure. It's something we see when buyers are tiring.

Moving on to Wednesday's Es auction, we should begin by first recognizing that price still is closing well above all short- and intermediate-timeframe moving averages. Put another way, while rising prices may not fit the bears' narrative, and despite my view that buyers are showing signs of fatigue, the short-term trend is still bullish.

My primary area of interest at Wednesday's open is expected to be 2097 - 2099. As long as value remains above that two-handle zone, I see no reason to consider adopting a particularly bearish posture. That said, because we've seen the market's bid soften toward the close of trading for two days in a row, I am very interested in looking for reasons to fade any continued attempt to auction price to new multi-session highs. Continued buying beyond 2107.25 encourages momentum buyers to chase price toward 2114 and 2121. Both areas I'd expect to find responsive sellers lurking nearby.

5-Minute E-Mini S&P 500 Futures (Es) Volume Profile

Investor R/T

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A failed trade from between 2097 and 2099 suggested further selling toward 2089 - 2090.50 is on the way. And if you're a bear hoping and praying for a break, you better set your sights on a close under 2089, because only that offers up any near-term chance for a trade back down toward the 200-day simple moving average.

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 no positions in the stocks mentioned.