The Trader Daily

 | Jun 06, 2014 | 7:45 AM EDT
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Party on, Wayne. Party on, Garth.

Whether you give credit to European Central Bank President Mario Draghi, Appaloosa Management frontman David Tepper or a squiggly line on a chart, the bottom line is bulls mopped the floor with the bears' faces on Thursday. It almost didn't matter what you were long, just so you were long. Sure, pockets weakness could be found. But assuming you weren't overexposed to a select group of consumer durables, discretionaries or healthcare names, your portfolio probably did just fine.

Away from individual equities, buyers could be found in everything from the major indices, metals and fixed income, all the way down to the yen and euro. That's right. Despite the ECB's best efforts, the euro actually finished the day higher. The bottom line is that nearly everything on my screen, save the greenback, finished the day in the black.  

With the rarely accurate, and frequently revised, monthly employment situation report being released at 8:30 a.m. ET, it's hard to imagine what the bulls will do for an encore. But assuming sellers don't emerge and sell the SPY down through $194, my baseline expectation is for higher prices. Short-term participants need to set aside concerns higher-timeframe participants might have with the E-Mini S&P 500 and E-Mini Nasdaq 100 futures contract, both registering overbought RSI readings, and focus more on the immediate-term trend in price. The bottom line is the bulls have the ball and appear unwilling to give an inch.

Traders operating within the day timeframe should consider using $194 as their intra-session pivot. Failure to hold that line opens up the potential for a slide back down toward $193.73 and $193.20. 


S&P 500 SPDR (SPY) -- 5 Minute Volume Profile
Source: eSignal


Additional Notes:

  1. Both General Motors (GM) and Ford (F) sat out Thursday's advance, but after the past few days this shouldn't come as a surprise. I remain long GM, with $36.50 strike June 13 weekly calls sold against roughly half my position. At this point, the most bullish development for GM shareholders would be for the stock to trade in a narrow range for a few days, building value above $35.50-35.75 before finally launching another assault on the $37-38 resistance zone. I remain quite bullish on GM and would not be opposed to buying back my short calls on a dip toward $35.50.
  2. One of Thursday's more impressive moves came in shares of Amazon (AMZN). I pointed out the inverse head-and-shoulders pattern in the stock back on May 20, but to be fair, I never thought it would take this long to catch a bid. Ordinarily, I might urge AMZN bulls to proceed with caution since the stock cleared my estimated target of $323.25. But targets really aren't anything more than best-effort guesses. And when conditions change, so too must one's strategy. With the notable improvement in the Relative Strength Index (back above the 50-center line), the stock closing above its 50-day simple moving average (though the average is still declining) and the outsized volume that accompanied Thursday's advance, I'm inclined to suggest existing longs simply adjust or ratchet higher their trailing profit stops. In my view, a stop on close (using weekly bars) beneath the 10-week simple moving average would be ideal. But if that's too much risk (holding for a week vs. a day), a stop on close (using daily bars) beneath the still declining 50-day simple moving average would likely suffice.
  3. Back on June 2, I suggested traders begin tracking both Microsoft (MSFT) and Corning (GLW) and both appear ready to extend their prior up trends. Suffice to say, neither stock will trade as fast as a high-growth momentum name. But if you're interested in a more methodical mover, these two are worth a second look. As discussed in the June 2 Trader Daily, I'd would still use a closing print above $21.60 as my trigger on GLW. As far as a stop is concerned, those wanting to give the stock every opportunity to move higher should consider the April 11 closing swing low of $20.39. Those wanting a closer stop might refer to the May 16 low of $20.95. Realistically, I suspect the May 16 low will prove sufficiently generous as such a close would also land the stock beneath its rising 50-day simple moving average. 

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

Columnist Conversations

I reached out last week to my close friend Ken Shreve, who is a prominent writer for the IBD.  I asked Ke...
I reached out last week to my close friend Ken Shreve, who is a prominent writer for the IBD.  I asked Ke...
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we will add this here to cheaply protect our downside a bit BOUGHT SPY SEP 244 PUT AT 2.70 ...



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