Trader's Daily Notebook: No Panic, but Not Much Interest Either

 | Jul 07, 2017 | 7:00 AM EDT
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Stock quotes in this article:

spy

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IWM

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QQQ

Equity markets struggled Thursday as all major-index ETFs finished in the red on slightly higher than one-month average volume. That said, the selling never had a panicked feel to it. Rather, there simply didn't appear to be any interest in buying the dip. For those keeping track, the SPDR S&P 500 Trust (SPY) and iShares Russell 2000 ETF (IWM) have joined the PowerShares QQQ Trust (QQQ) in closing beneath the 50-day moving average (MA).

We entered Thursday's E-Mini S&P 500 futures (Es) auction with 2419.75 to 2422.25 as the primary support area bulls needed to defend, and buyers were nowhere to be found. Take a look at Thursday's intraday chart below.

15-Minute Intraday S&P 500 Futures

The Es opened Thursday's regular session in the middle of our support zone, broke beneath it in a matter of minutes, and never managed to recapture it for the remainder of the session. Add this to the fact that we're back under the 50-day MA on a closing basis and I believe we can say the bears gained a bit of field position during Thursday's auction.

Most of you probably remember the Es closing beneath the 50-day MA on April 13, April 19 and May 17 (see chart below). What you may not realize, and what can't be determined by using a daily chart alone, is that day timeframe value remained above the 50-day MA on each of these occasions. Thursday's close under the 50-day MA is the first time this year we've seen value finish the day beneath that intermediate timeframe reference point.

Daily S&P 500 Futures
 

While I don't want to spend too much time discussing Thursday's shift in value, I do believe it's worth noting as, or if, the contract establishes a trend of closing beneath the 50-day MA. For now, we'll jot this down as something to keep an eye on.

Moving on to Friday's Es auction, let's not forget about the pre-market employment report. While I've no interest in speculating about the actual figure, we all know the report tends to heavily influence the regular-session open.

We'll enter Friday's auction with a focus on Thursday's 2408.25 volume point of control (VPOC/Value). Our baseline expectation will be for bearish continuation toward 2400.75 as long as we're trading beneath Thursday's VPOC. Continued selling beneath the big figure (2400), while potentially only a day timeframe overshoot, would have us targeting 2392.50 and 2383 (composite value from April 25 to May 17).

15-Minute S&P 500 Futures Volume Profile
 

A sustained trade above 2408.25 doesn't give bulls an advantage, but it does allow for two-way rotation back toward 2415.25. Only a close back above 2422 puts bulls on more solid ground heading into next week.

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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