The Trader Daily

 | Jun 03, 2014 | 7:30 AM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

spy

,

gm

For techies, Monday was all about Apple's (AAPL) Worldwide Developers Conference (WWDC). For others, however, Monday's market will be remembered as the day the Institute for Supply Management botched the release of its monthly manufacturing index. The initial ISM reading came in at 53.2. Given that the consensus range of estimates fell between 54.6 and 56.6, it's easy to understand why the market sold off the second that 53.2 figure hit the wires.

Once the ISM released the corrected reading of 55.4 (after initially correcting it to 56), bids reappeared, and anyone caught short was taken out back and shot. The bottom line is that we saw an ISM reading flip from concerning and bearish to comfortably bullish. Instead of showing month-over-month deceleration, the report reflected that the economic-growth trend had forged higher. 

As one trader joked to me (tongue in cheek), if a piece of economic data doesn't generate the desired effect, we'll just rerelease it a little while later with a few seasonal adjustments.

Moving on to Tuesday's SPDR S&P 500 (SPY) trading, our primary area of interest is little changed from Monday's level. As you'll recall, our baseline expectation for Monday's session had been that the bulls would remain in control as long as buyers responded to prices advertised near $192. As you can see on the chart below, the price spent relatively little time near that level before it sprang back toward session highs.

SPY -- Five-Minute Volume Profile
Source: eSignal

As far as Tuesday's session is concerned, our bias will once again remain largely bullish as long as buyers remain camped out between $191.98 and $192.08. Until a price break is sustained beneath that $0.10 zone -- on a 15-or-30-minute-bar close -- day time frame participants should expect dip buyers to remain active and in control. 

Let's switch gears away from the SPY, which seems to trade higher on a daily basis, and focus on a company that has struggled to get out of its own way. General Motors (GM) has become synonymous with the dreaded recall notice this year. But, as you may have noticed, the stock is no longer declining on bad news. The stock appears to have priced in its ongoing struggles with quality control, and that is why I've become interested in the name.

General Motors (GM) -- Daily Volume Profile
Source: eSignal

As you can see on the daily chart above, GM is trading at the lower end of its composite volume profile. While the bullish trendline break appears to be north of $35, I've opted to initiate a position with a stop on a close beneath $33.63, based on a weekly closing bars.

General Motors (GM) -- Weekly Volume Profile
Source: eSignal

If one considers the mid-May slide toward $33 to have been a failed attempt to break balance to the downside, the logical next step is for GM to auction back up toward the top of near-term balance, roughly at $35.65. Assuming buyers respond above $35.65, the next major area of interest would be the top of composite balance, or roughly the $37-to-$38 area.

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

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.