Choppy and directionless trading across much of the market continues to make life difficult for the short-term trader, and I doubt anyone expects much to change ahead of Wednesday's FOMC announcement and press conference. Fortunately, because the overall trend remains bullish, I believe traders willing to embrace a responsive approach to buying have a path toward day time-frame profitability.
As long as the E-Mini S&P 500 futures (or whichever index you're actively trading) continue to close above the eight-day and 21-day exponential moving averages (EMAs), the path of least resistance will remain higher. So rather than focusing too intently on the short side, patiently waiting for intraday dips and embracing the role of the responsive participant will remain a less stressful approach.
It's easy to spot the underperformer on the chart above. So rather than chase the recent strength in the Es or Russell 2000 E-Mini (Tf) futures, consider focusing a bit more of your energy on the E-Mini Nasdaq 100 contract (Nq). While there are no guarantees the Nq will break higher, my bet remains that if the market is going to break higher, tech will have to step it up and help lead the way.
Away from the major equity futures, we saw some serious selling in the ag names. Potash (POT), Mosaic (MOS) and CF Industries (CF) all suffered losses of between 2% and 4%. While the higher time-frame charts are a long way from looking bullish, I still have this group on my daily watch list for long opportunities. That said, another day of losses like we saw on Wednesday or Thursday and I'll likely kick these names into the gutter.
Several of you emailed regarding the selling in light crude oil Thursday, asking whether the short-term trend had flipped. My gut says buyers are tiring; however, until price breaks beneath the eight-day and 21-day EMAs, along with the yellow uptrend line, I see no reason to get too aggressive with any short sales. The eight-day EMA is sitting near the $50 mark, and I believe it's safe to assume a close beneath that level will trigger some thoughts of selling among existing oil bulls.
Moving on to Friday's Es auction, please note I am now charting the September contract. For those keeping track of the roll, the June to September roll value is currently negative nine handles.
Our baseline expectation will be for a retest of 2109.25 and Wednesday's 2110.75 intraday high as long as value remains above 2103.25. If the contract fails to hold above 2103.25 during Friday's regular session, the odds will favor continued rotation toward 2095.25. But as we've been discussing on a daily basis, adopting a bearish posture while the contract is closing above the eight-day and 21-day EMAs is rarely a good idea.
The bottom line is that while a break of 2095.25 and the eight-day EMA may trigger some short-term selling, I'd avoid turning too bearish until the contract has broken beneath the early June lows in the mid to upper 2070s and the 21-day EMA.
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