The Trader Daily

 | Jul 23, 2014 | 7:30 AM EDT
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Having become accustomed to a bit more intraday travel and index volatility, Tuesday's session can only be described as an utter bore. Despite gapping well above Monday's intraday range, the S&P 500 E-Mini futures contract spent the entire session churning within a 6.75 point range. As far as regular session volume is concerned, it barely managed to trade one million contracts. In the other major indices, intraday ranges and trading volumes were similarly light.   

On the earnings front, Tuesday's big after-hours reports came from Apple (AAPL) and Microsoft (MSFT). Unfortunately for traders, the after-hours reactions in both stocks were incredibly muted. From a higher timeframe perspective, MSFT has significant resistance between $47.50 and $49, dating back to 1999. I know that's going back a long time to find price resistance; but the bottom line is, the stock is nearing a point where I'd be awfully careful with existing (or initiating new) longs.

As far as AAPL is concerned, I mentioned previously (in the July 17 Trader Daily) not wanting to be long the stock until it closed above its July 16 $97.10 swing high, and I stand by that view. Baring a new swing high, I expect to ignore the name until, at a minimum, buyers show some conviction at $89-$90.

Tuesday's sleepy session did accomplish one thing: it put the bulls in position to push the SPDR S&P 500 Trust (SPY) back into a trending state. Not only does the SPY's composite profile lack upside excess (suggesting higher prices are coming), but value has also now shifted to its highest level ever. In my view, as long as dip buyers remain camped out against $197.50-$197.55 during Wednesday's session, the path of least resistance will remain higher.

In the event buyers pull their bids and the SPY slides back down through $197.50, the odds would immediately favor downside continuation toward $196-$196.25.


SPDR S&P 500 Trust (SPY)
Source: eSignal


Additional Notes:

  1. With General Motors (GM) scheduled to report their earnings before the regular session open on Thursday, I opted to sell the remainder of my position into Tuesday's rally. The stock, despite struggling to push through the early-March 38 swing high, still looks bullish on numerous timeframes. That said, I'm not comfortable enough with the position to hold it through earnings. 
  2. For the first time since last September, the Powershares DB US Dollar Index Bullish ETF (UUP) is trading above its 200-day simple moving average. With a decent base having formed between $21.20 and $21.60 over the past few months, I suspect a push through $21.60 will attract some bullish attention. This is definitively a market to keep on your radar. 
  3. There continues to be no bottom in sight for natural gas futures. So for those that have emailed asking where I'd be interested in the Ng contract or the United States Natural Gas Fund (UNG), we need to see some semblance of a bottom take shape before considering a trade. For now, I'd avoid this market.

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

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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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