Trader's Daily Notebook: Tune Out the Noise

 | Jun 16, 2017 | 7:00 AM EDT
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After a weak overnight session and bearish regular-session open, dip buyers returned to the E-Mini S&P 500 futures (Es) pits and managed to turn an ugly day into a small loss that barely registers concern among even the weakest of bulls.

It's tough to maintain an unbiased approach when so many around us are convinced the markets are either on the verge of a major collapse or destined to remain in bull trends for years to come. The fact is, nobody knows with any meaningful amount of certainty what the markets will do over the next one, three, six or 12 months. But we can observe trends over multiple timeframes, note when they're strengthening, and shine a light on those beginning to weaken. And if we tune out the noise around us and focus on the charts, I believe it's reasonable to say the short, intermediate and higher timeframe trends are not yet broken.

The shorter timeframe trend may break over the coming days or weeks. And if it does, we'll likely make some adjustments to our day timeframe scalping plans. For the time being, however, we'll maintain a flexible approach, where we're willing to fade both bullish and bearish gaps. And when it comes to an intraday initiative approach, where breakdowns are sold and breakouts are bought, we'll continue to avoid selling short in the hole (into day timeframe weakness) at all costs.

Daily S&P 500 Futures Volume Profile
 

Looking back at Thursday's auction, it's important to note the Es found buyers as it tested its 21-day exponential moving average (EMA), and closed back above its eight-day EMA. As shocked as many of us are that dip buyers continue to support this market any time it dips even marginally, we can't adopt a bearish posture before the price action warrants it.

Moving on to Friday's Es auction, we'll begin the day focused on 2426.50 to 2427.50. All trading above that area encourages a continued upward drift toward 2436.50 and 2441.75. As a reminder, the lack of supply above the low 2440s makes it a very difficult area to sell short again. My inclination is to either remain long or sit it out on the sidelines until the tape begins to weaken again.

15-Minute S&P 500 Futures Volume Profile
 

An open beneath 2426.50 that fails to hold the opening print and developing volume weighted average price (VWAP) has a fairly direct path toward 2417.75 to 2418.75. As demand within that area fades, our attention shifts toward 2411.25 and 2401.50 to 2402.50.

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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