The Trader Daily

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

paas

,

gg

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aem

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ngd

,

TLT

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spy

If you're racking your brain and trying to force trades this week, you're likely setting yourself up for a frustrating and stressful week. Remember, we only have three and half days of trading this week. And with anemic volume, comically low volatility, and Monday's session in the rear-view mirror,  it's a safe bet the most active traders are either operating on cruise control, or already at the beach.

As with all aspects of trading, you've got to know your timeframe. And if your strategy requires a more active market, this is certainly not the ideal time for you to be pressing your bets. As far as my own trading is concerned, I've been trying to wrap up the majority of my index-related, day-timeframe trades between 11 and 11:30 a.m.

With Fed Chair Yellen speaking on Wednesday, and the monthly employment situation report on Thursday, let's take a moment to consider where the SPDR S&P 500 Trust (SPY) is currently trading, and what must happen for us to consider a more cautious stance. As you review the chart below, be sure to recognize that the SPY is currently rotating within a narrow balance area.

 

SPDR S&P 500 (SPY) -- Daily Volume
Source: eSignal

 

As I've said in recent Trader Daily columns, the price action simply does not support a bearish thesis. With that in mind, I can't see labeling the SPY as anything worse than neutral. And labeling it as neutral is only acceptable because it's stuck in a roughly $194.50 -- $196.10 balance zone. Based on the profile, a close above roughly $196.15, or beneath $194.40 would be required to force the SPY out of balance and into a more trending state.

From a day timeframe perspective, I'd expect Monday's relatively symmetrical profile to leave traders in a holding pattern. All trading above $195.60 would likely keep buyers pressing their bets toward $195.95 and $196.10. Everything beneath $195.40 provides sellers with an opening to sell the SPY back down toward $195.03 and $194.40. Remember, looking beyond the very shortest of timeframes (for scalping), there's very little reason to adopt a cautious stance above $194.40.

 

SPDR S&P 500 (SPY) -- 15-Min Volume
Source: eSignal

 

Additional Notes:

  1. As gold and silver futures have rebounded, so too have a number of miners. Some miners, in fact, are trading at/near year-to-day highs. My favorites among the gold and silver miners are Pan American Silver (PAAS), Gold Corp (GG), Agnico Eagle Mines (AEM), and New Gold (NGD). And with gold futures having room to run toward 1356 -- 1364 before any serious supply issues re-emerge, I suspect these stocks all have further to run.
  2. The iShares 20+ Year Treasury Bond ETF (TLT) remains at the top of my list for both day timeframe short sided scalps, and a potentially higher timeframe swing short. For those interested in an extended range, I am simply interested in short set-ups between $113.80 and $114.50. But a close above $115.19 would trigger an immediate reset. Those stalking the short side must remember that the trend in bonds is still bullish. So any short sided trade, even if the odds appear favorable, is still a counter trend play.

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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