Trader's Daily Notebook: I'm Losing Patience With Russell ETF

 | Jul 19, 2017 | 7:00 AM EDT
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Tuesday's auction, while spectacular for E-Mini Nasdaq 100 futures (Nq) bulls, was a waste of time for E-Mini S&P 500 futures (Es) traders. For the regular session, approximately 870,000 contracts changed hands over a 10.5-handle range. And on a closing basis, the contract lost two ticks.

Tuesday's worst-performing index was the iShares Russell 2000 Index ETF (IWM) . While buyers were busy bidding the PowerShares QQQ Trust (QQQ) nearly 0.7% higher, the IWM lost around 0.25% on the day. I continue to hold a long position in the IWM, but would be lying if I said I wasn't bothered by its inability to sustain a break above $142. I continue to use the $140.50 to $140.80 zone as my stop.

The big hitters scheduled to report on Wednesday are Morgan Stanley (MS) and U.S. Bancorp (USB) before equity markets open for the day, and Qualcomm (QCOM) , American Express (AXP) and Steel Dynamics (STLD) after markets close.

Ordinarily, I wouldn't label STLD as a big hitter. But since I've little interest in the charts of the other names scheduled to report, STLD gets a place at the head of the table. Let's take a look at the chart.

Steel Dynamics (STLD) -- Daily

While names like U.S. Steel (X) and AK Steel (AKS) have been hammered over the past four to five months, Steel Dynamics has held its ground, consolidating in a bullish manner above the 200-day moving average (MA). My thesis here is pretty simple: I like the stock above $38. Without a move above $38, I wouldn't do a thing.

For those trading IBM (IBM) , the stock was hit for between three and four points after the company released its latest earnings report. There's no need to alter the chart or our view from Tuesday's discussion. Most traders will be watching the $150 level, so if you're active in the name, that's your primary level of interest.

Moving on to Wednesday's Es auction, we'll treat 2455 as our opening pivot. As long as we're trading above that figure, our baseline expectation will be for bullish price extension toward 2461.25. Given that no legacy supply issues exist above the low 2460s, selling short above that figure (without a meaningful day timeframe price reversal) is not something I'm interested in pursuing.

15-Minute S&P 500 Futures Volume Profile

A failed trade from 2455 (or a gap beneath that figure that breaks beneath the opening print and volume weighted average price) has the potential to test Tuesday's 2448 intraday low and support between 2445.75 and 2447. Our current expectation is for dip buyers to become more active toward the mid-2440s, so for now, we'll want to avoid selling the market short in the hole (or on weakness).

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

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The symmetry is holding up in MCD.  Target 1 is 163.34 if we continue to hold above here!  ...



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