As we begin the first full trading week of 2015, the question on everyone's mind is whether last week's selloff was anything more than a low-volume, year-end tax selling event.
I'd hate to label last week's decline as meaningless since it occurred on anemic volume (because we've rallied for years on crummy volume), but the bottom line is I believe any near-term decline will be cushioned by fresh, 2015 fund inflows. My best guess is any early-week selling will simply set the stage for another attempt at new life-of contract highs in the E-Mini S&P 500 futures (Es) contract. Until we see several days of obviously distribution beneath the 50-day simple moving average and a 14-period Relative Strength Index that fails to find its footing in and around the 50-center line, my inclination is to spend the bulk of my time searching for reasons to be bullish.
As far as Monday's regular session Es auction is concerned, day-timeframe traders should be primarily concerned with whether or not supply increases, or is cut off, beneath Friday's 2038.75 intraday low. In the event lower prices (beneath 2038.75) attracts additional supply, our focus will immediately shift down toward 2028.75.
Please note that the above 2028.75 support line falls roughly two points beneath the current 50-day simple moving average. My short-term bias would shift notably more bullish on the first sign of stabilization in and around 2028.75.
In the event Friday's 2038.75 intraday low cuts of supply and buyers return, our focus would shift up toward 2050.75 and 2060. An initial probe of 2060 would be expected to be rejected. But assuming dip buyers return against 2053/2054 (value from Dec. 31), my inclination would be to position for another attempt at 2060 and beyond.
- The Market Vectors Gold Miners ETF (GDX) and Junior Gold Miners ETF (GDXJ) both traded poorly during 2014. That said, I believe there's a chance they begin 2015 much like they did 2014: with a strong rally. In a nutshell, I want to see strength above the 50-day simple moving average, accompanied by a sustained break above the 50-center line on both the 14-period and 21-period Relative Strength Index (RSI). Between the two ETFs, the GDX currently looks the best. A couple more days of strength and I suspect the 21-period RSI will look as promising as the 14-period already does.
- Amicus Therapeutics (FOLD), a small-cap biotech company currently sporting a roughly $820 million market cap, had a spectacular year in 2014 (rising over 250%). And I think it has more room to run. With a current price of $8.60, this is a stock I want to keep on my buy list as long as it continues to close above $7.50. For those with a longer timeframe, it's worth noting that FOLD made a meaningful turn higher on the weekly and monthly charts over the past six to eight months.
Any trading or volume profile related questions can be posted in the comments section below, emailed to me at firstname.lastname@example.org or posted to my twitter feed @ByrneRWS