Monday was a pretty horrible day for anyone stuck in the metals, mining or oil drilling sectors. Names like Freeport McMoRan (FCX), Teck Resources (TCK), Transocean (RIG), Newmont Mining (NEM) and Alcoa (AA) were crushed. And despite the persistent buying we saw in these sectors during April, the charts of theses stock, and others like them, don't look too pretty. Nonetheless, my higher time-frame bias remains toward the long side in these sectors. And I'll be watching closely for any indication of a letup in selling.
The flip side to the weakness in the sectors above was found in the health care and biotech sectors. But aside from the Health Care Select Sector SPDR (XLV), which is trying to hold its 10-week, 30-week and 40-week simple moving averages, I don't see much to like in the charts of either the SPDR S&P Biotech (XBI) or iShares Nasdaq Biotechnology ETF (IBB).
If pressed for a trade in either the XBI or IBB (which several readers have requested), my inclination would be to try a long as close to $48 as possible in the XBI, with a stop-on-close beneath $45. If focused on the IBB, I might consider a long between $251 and $254, with a stop-on-close beneath $240. But again -- and I only mention this because I know many of you are anxiously trying to be long the biotech sector -- I really don't see a lot to love in either XBI or IBB at the moment.
Moving on to the E-Mini S&P 500 futures (Es), Monday's auction didn't leave us with much new or worthwhile information. Despite the fact that the bulk of Monday's business occurred above 2052.50, price was consistently rejected near our 2059 to 2061 area of supply during both the Globex and regular sessions. For now, I believe short-term traders should continue to anticipate supply, entering the auction between the upper 2050s and low 2060s, and demand (in the form of responsive buyers) returning on any dip toward the mid-2040s.
Our two primary areas of interest ahead of Tuesday's regular-session open are expected to be 2058.75 to 2060.25 and 2043.50. Treating 2052 to 2053 as our intraday pivot, all trading above that one-handle area encourages buyers to auction prices toward our upper area of interest, while everything beneath 2052 shines a light on 2043.50.
In both situations, my immediate thought is to play the part of responsive participant. Put another way, if you aren't comfortable scalping within a narrow range, consider sitting on the sidelines until value migrates above the low 2060s (and closes the session there) or beneath 2043.50.
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