Tuesday's auction was about as uneventful and inconsequential as they come, with both the E-Mini S&P 500 futures (Es) and E-Mini Nasdaq 100 futures (Nq) failing to break outside Monday's range. The Mini Russell 2000 futures (Tf) broke beneath Monday's low, but volume was low and the selling failed to attract additional supply. When Tuesday's session came to an end, the Tf contract finished within a few ticks of where it began. Again, a very dull trading day.
As far as what did move, there was plenty of chatter surrounding Nvidia's (NVDA) 7% decline. Credit for the decline went to Pacific Crest and their decision to lower their rating on the stock based on "concerns about market saturation for data-center chips." But let's face it. The stock's still up over 180% in a year's time. So while Pacific Crest may have done their homework, the bottom line is institutions were probably looking for any excuse at all to reduce their risk in a name that's had an incredible run.
As far as specific numbers are concerned, NVDA closed more than one 50-day average true range (ATR) beneath the 50-day exponential moving average (EMA), on double its monthly volume. While the stock can certainly stabilize back above the 50-day EMA and regain its composure, I'd rather look for names that haven't come under such obvious distribution. I'd look elsewhere until the stock either tests its 200-day simple moving average (which remains nearly 24% lower) or trades above $120.
Away from Nvidia and highflying tech, we continue to see all things apparel-related taken out back and shot. Nearly any stock connected to the department store, apparel store or apparel manufacturing industries has endured heavy selling for a considerable amount of time. Two names, however, that have yet to come under sustained selling are Children's Place (PLCE) and TJX Companies (TJX) . While I don't have a position in either stock, and it's always possible they are the two darlings that will get through the sector rout unscathed, I've got my eyes on them for the simple reason that poorly performing industries tend to pull even the best performers lower. (TJX Companies is part of TheStreet's Action Alerts PLUS portfolio.)
Moving on to Wednesday's auction, we'll end the session with a focus on 2360.75 and 2351.50. As long as any early session (or opening) weakness quickly stabilizes around 2351.50, we'll look for buyers to continue to work their way up toward 2360.75. As we discussed on Tuesday, price acceptance above 2360.75 to 2361.75 is not something I'd be in a hurry to fade (sell short).
A failed trade from 2351.50 likely triggers a secondary slide toward 2347. And after what I believe would be a failed attempt to re-stabilize price above the low 2350s, bearish continuation toward 2338.50 and 2333 would become our near-term targets.
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