Morning Es Trading

Tuesday's Market Review Tuesday's regular session wasn't a particularly busy one from an overall volume standpoint, but we continue to see some genuinely impressive pockets of strength. While the fire under the consumer staples sector has cooled over the past five trading sessions, the excitement in stocks like Apple (AAPL), Microsoft (MSFT), Intel (INTC) and Corning (GLW) continues to grow hotter. Rather than opine on why folks are suddenly interested in old tech, I'll simply suggest - again -- that folks proceed with caution when chasing stocks that have exploded higher in a very short amount of time. While I wouldn't be stalking these names on the short side, I would encourage prospective buyers to think twice about chasing a stock, like Microsoft, that's advanced nearly 20% in a month's time. E-Mini S&P 500 -- Five-Minute Volume Profile Source: eSignal View Chart » View in New Window » As we prepare for another Federal Open Market Committee (FOMC) announcement, I thought I'd share a somewhat unique shift in sentiment I've begun noticing among active participants. For weeks, if not months, many of the traders with whom I regularly chat have insisted that the current equities advance has been built on puppy-dog kisses and fairy dust. As a result, the majority of them have spent every waking moment trying to short anything resembling a downtick. Their convictions have deepened with every horrid economic data point. That's changed in recent days. Now, many of those same traders have resigned themselves to the idea that The Bernank, aided by central bankers throughout the developed world, truly can control (or manipulate) the financial markets. There's an increasing degree of acceptance among traders that economic data points, no matter how concerning, simply don't matter. Tuesday's disappointing reading in the Chicago purchasing managers index was just the most recent example of how quickly market participants are willing to look past a bad piece of economic data. The bottom line is this: For the first time all year, I've begun to see a number of traders shift from a position of doubting Thomas, to one of general acceptance. An increasing number of retail traders have come to accept that the Federal Reserve is capable of pushing the market as far as it wants to do. File this observation under the heading of: things that make you go, hmmm. Wednesday's Es Trade Keeping in mind that most market observers will be focused on the 2 p.m. EDT announcement from the Federal Open Market Committee announcement, I'd remind traders not to forget about the premarket release of ADP employment and the PMI manufacturing index. Thirty minutes into the day session, we're likely to see the most recent read on the Institute for Supply Management's manufacturing index and construction spending -- and, between the two, the ISM is expected to be most important. If you're carrying positions into the ISM release, be sure you have a handle on your risk. E-Mini S&P 500 -- 15-Minute Volume Profile Source: eSignal View Chart » View in New Window » Wednesday's primary area of interest is expected to be 1587.50/1588 on the E-mini S&P 500. As long as demand remains intact above that 2-tick area, I believe the path of least resistance will remain higher. As discussed in Tuesday's column, acceptance above 1591.50-to-1592 will result in 1600 becoming our most logical upside target on the Es. Yes, market participants are actively willing to shake off crummy economic data -- but that doesn't mean said data can't generate some intraday volatility. Should the Es slide back down through 1587.50, sellers would be expected to begin aggressively auctioning the contract back down toward 1582.50. Continued selling would have us looking down through 1577.50 and toward 1573.50, but until demand thoroughly collapses near 1582.50, I'll expect a general buy-the-dip mentality to prevail among most short-term participants. Current conversion formula: Es (June 2013 contract) value X .100308 = SPY Value 1592 = 159.69* 1587.50/1588 = 159.24/159.29** 1582.50 = 158.74*** 1577.50 = 158.24* 1573.50 = 157.84* 1571 = 157.58***

Morning Es Trading

Traders are increasingly accepting that economic data, no matter how concerning, simply don't matter.

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