The broad market, as represented by the E-Mini S&P 500 futures (Es) contract, has gone absolutely nowhere since late-December 2014. In fact, if you bought the June 2015 Es contract the day after Christmas 2014, you'd currently be about flat. So while legions of traders continue to turn bullish with every 25-handle rally, and bearish with every negative economic data point and/or 15-handle decline, the reality is we're spinning our wheels.
Don't give the market control over your emotions. Follow value over a higher timeframe. And if you're trading during the day timeframe, use intraday price volatility (responsively) to your advantage.
There's a time to play the part of the initiative participant (buying breakouts), but that time is not now. This continues to be a market best suited toward responsive participants comfortable fading the crowd into easily identifiable support and resistance areas. So for the time being, let's recognize that the Es is trapped in a wide 2035-2108 composite balance zone. And if you are going to trade within that zone, think long and hard before turning bullish into the big figure (2100), or bearish into 2040.
Moving on to Thursday's regular session Es auction, I want to begin the session with a focus on 2081.25/2083.25. Value migration above that two-handle area would immediately shift our focus up toward 2095.25 and the top of composite balance (2106-2108). But until said migration occurs, we'll want to maintain a responsive tone to our trading and consider the potential for continued two-way rotation between the low-2080s and 2067.
A failed trade from 2067 (value migration beneath 2067 or a 30-min bar close beneath that level) shines a light on 2059.25, 2053 and 2045.50. Realistically, once 2067 is lost, I wouldn't expect buyers to re-enter the auction until 2053 is probed and shows signs of holding.
1. FireEye (FEYE) has spent the past six weeks consolidating its mid-February advance. If you take a quick look at a weekly chart of the stock, I think you'll understand why I believe the bulls deserve the benefit of the doubt in this situation.
The daily chart (not shown here) isn't quite as clean, but taking a weekly perspective helps us see the current pullback as bullish consolidation rather than a bearish decline. If swing-trading FEYE, I wouldn't want to see the stock trade back down through $36.50-$37.
2. There's been quite a bit of chatter over ExxonMobil (XOM) over the past few weeks as it bounces around the $85 mark, and given news that Royal Dutch Shell (RDS.B) will buy BG Group for $70 billion, traders have an entirely new reason to focus on the stock. We last covered XOM in the March 12 Trader Daily as it broke beneath $85. I opined at the time that the weekly and monthly charts were telling us to avoid this stock on the long side. My opinion hasn't changed a bit.
As you can see, every weekly exponential moving average (EMA) is in a downtrend. The Relative Strength Index (RSI) hasn't been above the 50 center line since mid-2014. And the moving average convergence/divergence (MACD) looks horrid. Is the stock oversold? Perhaps, but so what? If you're looking for something to go long, I'd encourage you to look somewhere where the trend isn't so obviously bearish. While I have no interest in selling XOM short, I simply can't see wasting time stalking this one on the long side.
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.