Ahead of Wednesday's E-Mini S&P 500 futures (Es) auction we were looking for all trading above 2072.50 to support repeated attempts to push beyond 2082. But aside from a muted, early-session drive toward the upper end of Tuesday's regular-session range, the bulls were AWOL from the session's trading. Blame the weakness on the implosion in the retail, biotech and transportation sectors if you feel the need to identify a culprit. But when it comes right down to it, the bears owned the field on Wednesday.
The ugliest price action was unquestionably found in retail land. Names such as Fossil Group (FOSL), Macy's (M), Michael Kors (KORS), Nordstrom (JWN), V.F. Corporation (VFC) and Kohl's (KSS) were massacred. And frankly, if you review the companies that make up the S&P 500, you'll find Wednesday's worst-performing stocks were nearly all retail-related names.
But maybe I'm being too downbeat. Perhaps I should focus more intently on Wednesday's better- performing sectors. After all, plenty of basic material names (metals, mining and energy-related interests) had a fine day. Names such as Freeport-McMoRan (FCX), Newmont Mining (NEM), Devon Energy (DVN) and Halliburton (HAL) put up strong numbers. Unfortunately, I highly doubt the Es can muster the strength to push past 2080 and move on toward the big figure (2100) with only the leadership of the basic materials names.
The bottom line is this continues to be a difficult market to navigate as sector-related themes seem to shift by the day. As far as the Es is concerned, we probably should expect the volatility and choppiness to continue until a more aggressive participant takes the reins above 2080 or beneath 2030.
Moving on to Thursday's Es auction, prospective buyers will want to proceed with caution until the contract shows signs of holding above 2062 to 2063.50, or begins to stabilize closer to 2048.25. My baseline expectation is for choppy, albeit downward-slanting rotation as long as we're trading between those two areas.
A sustained trade above 2063.50 encourages traders to more thoroughly auction the thinnest (poorly auctioned) part of Wednesday's profile, with a primary focus on 2070.25. While a secondary collapse beneath 2048.25 opens the door to more dramatic bearish extension, this time targeting 2026 to 2031.75.
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