As Friday's auction came to a close, I couldn't help but reflect on the names that were taken out back and shot during the regular session.
Microsoft (MSFT) lost 7.2%. Alphabet (GOOG) shed 5.3%. Starbucks (SBUX) was clipped for nearly 5%. Other well known names, such as Kimberly-Clark (KMB), Facebook (FB) and Visa (V) were all hit for between 3.7% and 2.1%. And yet, even with the selling in these big-name stocks, the S&P 500 finished flat on the day. Not too shabby if you ask me.
As far as the closing stats for Friday's regular session are concerned, roughly 1.22 million E-Mini S&P 500 Futures (Es) contracts traded over a 14-handle intraday range. The session's value area, where 70% of the auction's business occurred, was a little lower than Thursday's value area. But the volume point of control (VPOC), or value, actually remained dead even with Thursday's 2085.75 figure. As far as value migration is concerned, the lower level could be a red flag. But when it comes down to full-session value migration, and the closing price, bears failed to maintain sufficient pressure to end the week on a genuinely negative note.
It's also important to note that the price closed above the eight-day exponential moving average (EMA). Given how, and where, the contract was trading around 11 a.m., closing above the eight-day EMA was a respectable way for bulls to end the week.
As we begin the new trading week, we'll want to keep in mind that there will be a daily deluge of earnings reports, as well as a heavy economic calendar. On Wednesday the Federal Reserve's Federal Open Market Committee will announce its decision on interest rates. So we have plenty of potential for volatility during the regular trading day. Keep an open mind, and avoid trying to force your opinion on the market.
Our primary area of interest during Monday's regular session of the Es auction is 2080.25/2081.25. As long as any probes of the low-2080s are promptly rejected, bulls have an open door to auction the price toward 2088 and 2093.
Ideally, bulls would rather not see the price trade through 2082.50. But in the interest of allowing for a bit more volatility, we'll use value migration (or a 30-minute bar close displaying little to no bearish excess) beneath 2080.25/2081.25 as our line in the sand. All trading beneath that area encourages short-term traders to sell the contract toward 2070.50. A secondary and more meaningful target would be 2058.50/2060.50.
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.