The Trader Daily

 | May 01, 2014 | 7:30 AM EDT  | Comments
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Stock quotes in this article:

spy

,

TLT

,

QQQ

,

IWM

,

btu

,

FB

,

bidu

Index volatility was kept to a minimum following Wednesday's Federal Open Market Committee (FOMC) announcement, and that resulted in a moderately choppy and quiet grind higher into the regular-session close. The one complaint I will raise, however, is that the iShares Barclays 20+ Year Treasury Bond (TLT) rallied higher alongside the major indices. In my view, this relationship is unlikely to persist for very long. I expect either equities or bonds to reverse Wednesday's gains ahead of Friday's payroll figures.

Thursday's trading in the SPDR S&P 500 (SPY) is expected to revolve around $188.45/$188.65 and $187.75. As long as the SPY continues to hold above $187.75 on a 15- or 30-minute closing basis, my baseline expectation will be for a push up toward $188.45/$188.65. Should value migrate above $188.65, I'd see little reason to bet against a continued drive toward $189.55. So, in an attempt to simplify things, I'd advise extreme caution if you're fading strength above $188.65.

Should the fund fail to hold the line at $187.75, that would begin to attract sellers back into the market. That said, any day-time-frame selling is unlikely to gather a head of steam until the SPY is closing 15- or 30-minute bars beneath $187.27. A collapse in demand from $187.27 would kill the recent bullish momentum and encourage traders to sell the stock back down toward $186.80 and $186.

SPY -- Five-Minute Volume Profile
Source: eSignal

PowerShares QQQ (QQQ) has been making strides to reverse its multi-week bearish downtrend, but it's still got a ways to go. Day time frame traders can review the chart below for my specific areas of interest. But anyone operating outside the day time frame should remain mindful of the fact that the QQQ is still trading beneath its 50-day moving average and multi-week downtrend line. Simply put, this ETF remains trapped in the penalty box and should either be avoided (by long-only traders) or, for more aggressive traders, sold short on rips.

QQQ -- 15-Minute Volume Profile
Source: eSignal

The iShares Russell 2000 Index (IWM) has even further to go to reverse its multi-week downtrend. Despite attracting buyers against its 200-day simple moving average, the IWM is still a long way away from recapturing its 50-day moving average and breaking above its downtrend line. Long-only traders operating outside the one-to-three-day time frame should continue to avoid this ETF.

IWM -- 15-Minute Volume Profile
Source: eSignal

Additional Notes:

1. The daily trading in shares of Peabody Energy (BTU) continues to be bullish, but I suspect we're nearing a pullback in the name. I continue like this stock for both day-time-frame and higher-time-frame traders, and would look for a buyable dip against the 20-day exponential moving average. As a reminder, only a collapse beneath $16.50 would remove this stock from my day-to-day and swing trading list.

2. Of the many high-growth momentum names I follow, Facebook (FB) remains one of the few on which I'm still bullish. Not only do the out-year growth and earnings-per-share numbers lend support to the stock, but it's also one of the few in this group that hasn't completely broken down on a technical basis. For active traders, this remains a great stock on a day and multi-day time frame. The most immediate resistance level on Facebook looks to be between $61.50 and $61.75.

3. We may be several days (or even weeks) away from being able to sell these momentum names short, but one of the names at the top of my list is Baidu (BIDU). Assuming this stock doesn't trade back up through $167 and regain its footing, it will remain at the top of my short-sell watch list.

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

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