Tuesday's regular session E-Mini S&P 500 futures (Es) auction, while seriously lacking in trade volume, did manage to trigger a bit of bullish excess. The excess I am referring to is the afternoon drive from near 2126 to above 2130.
The overall move in price wasn't all that impressive. But volume during the advance was anemic, and prices failed to make any headway whatsoever toward overall price acceptance. In the near term, we should not be surprised to see traders test the waters on the short side, using value migration above Tuesday's 2130.25 intraday high as their measure of risk.
Before digging into Wednesday's trade plan, I want to take a moment to touch on the U.S. dollar futures. We all know the dollar has been under pressure since failing to sustain a break over the big figure (100). The question now is whether buyers will remain sufficiently resilient against the early-February major swing low (93.385) to bid prices back up toward mid-March and mid-April highs.
My guess is that short timeframe responsive buyers who bid into the weakness toward those early-February lows are already on the offer ahead of the 50-day exponential moving average. Beyond that, I'd be on the lookout for sellers returning to the auction on any upside retest of the prior uptrend line (highlighted in red on the chart above).
Moving on to Wednesday's Es auction, I want to begin the session with a heavy focus on 2125.75. If sellers are going to test the upside excess triggered during Tuesday's afternoon session, I'd expect them to do so against the mid-2120s. The bottom line is all trading beneath that area offers day timeframe scalpers an opportunity to sell the contract toward 2120.75 and 2114.75.
Traders looking beyond the next few hours would probably be best served by sidestepping any short-sided scalp trades and simply sitting on their hands and awaiting a buying opportunity toward 2114.75/2113.75. I'll continue to expect the current uptrend to remain intact as long as dip buyers respond to price volatility toward that one-handle area.
1. One astute reader emailed asking for an opinion on Infoblox (BLOX) yesterday, and despite my inability to even remember what this company did, I pulled the chart and immediately saw a reason to be bullish.
After gapping higher in late February, the stock traded sideways for more than two and half months before finally breaking higher on Monday. Traders trying to grab a hold of BLOX and hang on for an intermediate-timeframe swing trade should consider measuring their risk against the rising 50-day exponential moving average (EMA). More conservative participants, which is another way of saying less patient or shorter-timeframed folks, might consider trading against the rising eight-day or 21-day EMA.
2. Natural gas futures, or the United States Natural Gas Fund (UNG) for equity traders, were aggressively sold from multi-month highs on Tuesday. But I don't think bulls should completely throw in the towel. Regardless of which instrument you trade, I'd avoid turning overly bearish based on a single session's weakness, and instead keep an eye out for buyers returning toward the rising 50-day EMA.
3. Despite my willingness to look beyond a single session's selling in natural gas, I'm not nearly so forgiving when it comes to crude oil futures.
Tuesday's decline in front month July 2015 crude oil futures broke both short, and intermediate-timeframe uptrend lines. The only thing lending support at this point is price support near $58 and the 50-day EMA. In a nutshell, I remain in the camp that says crude oil and the companies that drill or supply it should only be rented, and not owned.
Any trading or volume profile related questions can be posted in the comments section below, emailed to me at email@example.com or posted to my twitter feed @ByrneRWS.