Wednesday's E-Mini S&P 500 futures (Es) auction offered little in the way of fresh clues as to which way the market might break in the near term. Bearish traders continue to insist that the current choppy trading is the formation of a major top. While bulls remain generally optimistic that a head of steam is building for an upside surge. I honestly haven't a clue which group will ultimately prove accurate. But given how many participants have been begging for a correction (in price), perhaps our correction will continue to occur through time rather than price. Won't that be annoying!
As we prepare for Thursday's Es auction, let's remember that the lack of motivation among higher-timeframe participants is the primary reason anyone operating outside the day timeframe should remain, for the most part, on the sidelines and in cash. Traders comfortable navigating the day-timeframe rotations should be able to find consistent opportunities. Just don't get stubborn in regards to managing your day timeframe risk.
Thursday's primary areas of interest are expected to be 2100.25/2102 and 2090. Downside continuation and value migration beneath 2090 would be expected to trigger additional selling toward 2081 and Tuesday's premarket swing lows.
As long as value remains above 2090, my baseline expectation is for day-timeframe rotation between that figure and 2100.25/2102. In the event prices are once against accepted above 2102, the bulls will be presented with yet another opportunity to auction the contract toward 2113.50 and new life of contract highs.
- One group that shined during Wednesday's otherwise dull regular session auction were the gold and silver miners. Names such as Silver Standard Resources (SSRI), Pan American Silver (PAAS), Newmont Mining (NEM) and Compania de Minas Buenaventura (BVN) all surged higher. In some case, Wednesday's strength resulted in new major swing highs. Similar to many of you, I'd nearly given up on the miners breaking meaningfully higher. Unfortunately, while the surge has given bulls a reason to be optimistic, I believe caution is still warranted until gold futures sustain a break above approximately 1225. If you're a shorter-timeframe trader that chased Wednesday strength, you don't want to see gold futures close back under 1203-1205.
- I'm rarely a fan of retail stocks, but even I was eyeing Michael Kors Holdings (KORS) for some indication that a bottom was in place. Based on Wednesday's decline and new swing lows, such an indication appears to be a ways away. If you're following KORS and stalking it on the long side, consider sitting on your hands until the stock reverses back above $63 and its 21-day exponential moving average. Put another way, rather than gamble on a random low point, wait for a few days of strength to indicate a shift in the balance of power is in place.
- Another name I know many of you are following is GoPro (GPRO). This stock has done nothing but trade sideways to lower since gapping higher on the back of its late-April earnings release. A drive through $51-$52 would place the stock above its long-term downtrend line (dating back to early October 2014) and put buyers in a favorable position to take on the 200-day EMA. My view on GPRO is simple. As long as it's closing above its 50-day EMA, dip buyers have a reason to buy in anticipation of an upside break (above $51-$52). A decline beneath the 50-day EMA sends GPRO back to the penalty box.
Any trading or volume profile related questions can be posted in the comments section below, e-mailed to me at firstname.lastname@example.org or posted to my Twitter feed @ByrneRWS