Thursday's auction was all about rotation. Traders punched out of high-tech momentum names shortly after the open and moved into small-cap Russell 2000 stocks. Names like Facebook (FB) , Amazon (AMZN) , Apple (AAPL) , Netflix (NFLX) , Alphabet (GOOG) and Tesla (TSLA) finished the session near the flat line, while the iShares Russell 2000 ETF (IWM) put in an incredibly strong showing, closing near major resistance at $139. (Facebook, Apple and Alphabet are part of TheStreet's Action Alerts PLUS portfolio.)
The chart above has the PowerShares QQQ Trust (QQQ) in the top pane, and the IWM in the lower pane. It's easy to see how aggressive sellers were in the QQQ shortly after the open, and how aggressive buyers became in the IWM roughly two hours after the regular-session open. While the QQQ did recover from it's early morning decline, there's no question which ETF attracted the most money.
On the daily chart above, we see the IWM breaking above a monthlong downtrend line and bumping back into resistance near $139. Now, we've seen the IWM auction above $139 and probe new highs on two occasions this year. Both times demand soon fell flat and the breakouts reversed. While I don't want to get my hopes up that small-caps can finally take the lead, I do expect responsive buyers to remain active as long as we're closing above $137.80 to $138, and initiative (breakout) buyers to press their bets as value migrates above $139 to $139.50.
Moving on to Friday's E-Mini S&P 500 futures (Es) auction, we'll expect the premarket monthly employment report to heavily influence the opening print. However, after the initial five to 15 minutes of regular-session trading, our focus will be split between 2323.50 and 2430.25.
A sustained trade above 2430.25 encourages bullish continuation, and like our discussion of value migration above 2417 in Thursday's note, continued value migration above 2430.25 is not something I'd be in a hurry to fade.
An early session fade toward 2423.50 to 2324 is likely to attract an initial round of dip buyers, but unless you're looking to initiate a swing trade, you may want to keep your powder dry until price is holding above the session's developing volume weighted average price (VWAP). Continued selling beneath 2423.50 finds support near 2420.25, and again between 2411.25 and 2412.75. Only a session close beneath 2412.75 forces us to rethink our bullish posture.
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