Trader's Daily Notebook: This Is Downright Sleep-Inducing

 | Dec 22, 2016 | 7:00 AM EST
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As many of you no doubt noticed, Wednesday's regular-session E-Mini S&P 500 futures (Es) volume was borderline ridiculous. For the day, roughly 565,000 contracts changed hands over an 8.25-handle range. To put Wednesday's volume in perspective, it came in approximately 20% lower than Tuesday's figure. And I thought Tuesday's session was a snooze-fest! 

As far as Wednesday's trading range is concerned, until the final hour of the session, when the contract broke from the mid-2260s down toward 2260, 70% of the session's volume had transacted within a six-tick zone. For those trading the SPDR S&P 500 ETF (SPY) , six ticks on the Es amounts to around 13 to 15 cents on the SPY. While it's true volatility has the ability to emerge out of nowhere, knowing when the odds favor reduced participation and limited activity can save the generally active day timeframe trader a lot of money and countless hours of frustration.

In addition to the deathly quiet action in the Es contract, most names on my watch list simply churned in a narrow range, generally adhering to whatever trend they'd been moving in for the past few days or weeks. Names like Alphabet (GOOG) and Apple (AAPL) are holding their ground, quietly making their way toward swing highs. Others, such as Facebook (FB) and the iShares Nasdaq Biotechnology ETF (IBB) , seem incapable of attracting any serious attention from buyers. (Alphabet, Apple and Facebook are part of TheStreet's Action Alerts PLUS portfolio.) 

One name we're used to seeing underperform is Twitter (TWTR) , and after its dismal performance on Wednesday, I suspect it'll once again be placed on the "ignore" list of most traders. I had turned positive on the name earlier this month when it pushed past $19 and the 50-day simple moving average (SMA). But now, with the stock back under the 200-day SMA and year-to-date volume weighted average price (VWAP), I've lost a fair bit of interest. Realistically, traders sticking with Twitter are doing so in hopes that previously interested suitors, such as Disney (DIS) , (CRM) and/or Alphabet will return to the table and take another shot at the company. (Disney is part of TheStreet's Trifecta Stocks portfolio.) 

Moving on to Thursday's Es auction, continue to respect how quiet the tape has been, and think long and hard whether it makes sense for you to be trading after the first 90 minutes. This time of year is nearly always quiet, and it's apt to remain so until after the first of the year. 

15-Minute S&P 500 Futures Volume Profile

We'll enter the session focused on 2262.50. As long as the contract is trading beneath that level, sellers have an opening to auction prices down toward 2256.50, with a secondary target being 2248.50 to 2249.50. A sustained trade above 2262.50 will simply refocus our sights on 2268.75. 

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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