As we prepare to wrap up another trading week let's take a moment to note that the June expiration E-Mini S&P 500 futures (Es) contract is now the front-month contract. For those interested in equalizing their data, please note the rollover value from the March contract to the June contract is 7.5 points. All trade plans moving forward will reference the June Es contract.
Moving along to Friday's Es auction, I want to begin the session with a focus on 2061 and 2054. My baseline view is that any early session dip, as long as it holds above 2054, should be viewed through a bullish lens. Assuming dip buyers remain active against 2054, our next order of business would be pushing value through 2061. All trading (bullish extension) above 2061 brings 2067.50 and 2075 into focus.
Failure to hold the line near 2054 doesn't completely reverse Thursday's momentum, but it does squash some of the recent excitement. All trading beneath 2054 encourages extended rotation between the upper-2040s and mid-2050s. Overall, though, I'd expect a sustained trade beneath 2054 to favor a more rotational intraday approach. The bears don't begin to regain their short-term edge until they sustain a break beneath the upper-2040s. From there we'd be expected to fill the gap toward the low-2030s.
- In the world of bottom-fishing stocks, few names have hurt traders worse than those in the coal and iron-ore sectors. I received several questions regarding Peabody Energy (BTU) and Cliffs Natural Resources (CLF) on Thursday, and while I tried to keep open mind, I just can't find a single reason to buy either stock. It doesn't matter whether you're looking at BTU, Alpha Natural Resources (ANR), Cloud Peak Energy (CLD) or Walter Energy (WLT). From a technical perspective, they're all pretty much the same. Ugly! They should all be avoided. And as far as CLF is concerned, there's little to do there until iron ore futures begin to stabilize. For the record, iron ore futures were printing new multi-year lows on Wednesday. Like anything in the coal sector, CLF should be avoided.
- Intel's (INTC) languishing stock price has been highlighted several times in recent days inside "The Trader Daily," and thanks to the companies recently released downbeat revenue forecast, we know why. We last reviewed the charts of INTC March 6. As you may recall, our focus was on the bearish price action in and around the higher time-frame moving averages. For those who entered Thursday's session short, well done! For those caught flat-footed (like me) and still stalking an entry, we'll want to look for some sideways chop toward the five-day or eight-day exponential moving averages. One thing is certain for those currently bearish on INTC: You do not want to see a weekly close above $33, especially one displaying any sort of meaningful of downside excess (longer lower shadow or candlestick wick).
- A noteworthy laggard during Thursday's rally was biotech. So, if you've been stalking the iShares Nasdaq Biotechnology (IBB) for a short, it's worth jotting down that buyers did not rush to that sector during the most recent buying spree. I'm maintaining a break of $332 as my area of interest for a potential short.
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