The Trader Daily

 | May 06, 2014 | 7:30 AM EDT
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There's no denying Monday's trading volumes were incredibly low. But based on the grumblings from active traders, you'd think the SPDR S&P 500 (SPY) failed to trade outside of a $0.30 range for the entire session. Nothing could be further from the truth. From low to high, the SPY traveled nearly $2. If my choices are high volume and a $0.30 range or low volume and 2 handles of travel, I'll take the low-volume volatility every time.

Three weeks ago the PowerShares QQQ Trust (QQQ) was headed for new swing lows, but that's no longer the case. We currently find the QQQ bumping up against the underside of its two-month downtrend line, within spitting distance of its 50-day simple moving average and a mere $1 from the top of its composite balance high. Perhaps buyers will rise to the occasion and drive prices through $89, but that's not a bet I am currently willing to make. In fact, until I see several sessions close above $89, my inclination is to sell the QQQ on intraday strength.

Daily Chart of QQQ

Small-cap names continue to underperform large-caps, and we saw this again during Monday's session as the iShares Russell 2000 (IWM) traded weaker than both the SPY and SPDR Dow Jones Industrial Average (DIA). With the IWM trading near the halfway mark of its $107.25-to-$115.60 balanced zone, those not operating within the day time frame should probably just avoid this ETF altogether.

Prospective (dip) buyers should look for a break of the 200-day simple moving average to flush the IWM toward the early February swing low of $107.25. While short-sellers should remain patient and await an upside test of $115 to $116.

Daily Chart of IWM

The bears blew another golden opportunity in the SPY at Monday's open, and as a result, we find ourselves trading back toward the upper end of composite balance. I've made a number of notes on the chart below, but the bottom line is that all trading above $188.60 would put the bulls in a position to auction prices up toward $189.05 and on to new all-time highs. As far as any bearish setup is concerned, sellers need to see upside excess (similar to what we saw on April 4), or a collapse in demand beneath $187.35. 

15-Minute Volume Profile SPY

Additional Notes:

1. Assuming the SPY doesn't fall apart in the coming days, the Industrial Select Sector SPDR Fund (XLI) looks great to move higher. If you dig a bit deeper into this ETF, you'll find Boeing (BA), the fourth-largest component in the XLI, has broken above multi-week resistance at $131 and appears ready to fill its late-January gap toward $137.25.

2. Similar to Boeing, Precision Castparts Corp (PCP) is a component of the XLI and looks good to move higher. The bullish case for Precision Castparts would improve above $260, and would strengthen quite a bit more above $265.

3. Apple (AAPL) continued its post-earnings rally on Monday, clearing the $600 mark. There's no denying this stock has moved back to top every momentum trader's watch list, and barring a collapse back beneath the $585-to-$590 area, I see no reason for bearish trader to even consider glancing at this chart. The bulls are in charge of this one.

Any trading- or volume-profile-related questions can be posted in the comments section below, emailed to me at or posted to my twitter feed @ByrneRWS

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