Monday's holiday shortened auction may have occurred on reduced volume, but that sure didn't prevent sellers from attacking the E-Mini Nasdaq 100 futures (Nq).
We've all witnessed the air coming out of the FANG -- Action Alerts PLUS holding Facebook (FB) , Trifecta Stocks name Amazon (AMZN) , Netflix (NFLX) and Google parent Alphabet (GOOGL) -- and high tech balloon over the past two to three weeks.
Apple had been churning beneath its 50-day moving average (MA) since early June, and is now beginning to close beneath its 100-day MA. Facebook and Amazon, two names that had been fighting to remain above their 50-day MAs, succumbed to selling pressure on Monday, and are beneath that intermediate timeframe reference point for the first time early-January.
And Alphabet, after rallying more than 17% between late-April and early June, has given up approximately 7% in the past six trading sessions, and isn't too far from testing its year-to-date (YTD) volume weighted average price (VWAP).
A number of semiconductors stocks, names such as Applied Materials (AMAT) , Lam Research (LRCX) , KLA-Tencor (KLAC) and NVIDIA (NVDA) had been on fire from the start of the year. But that all ended on June 9. And they've been trending lower ever since.
It isn't difficult to stare at the chart of the Nq contract above and determine price is trying to move lower over the short term. With that in mind, whether you're currently short or looking for an area to test the long side, keep an eye on 5560 and 5450. The 5560 level represents a swing low from May 18, while the 5450 level represents the approximate breakout point from the mid-March to late-April month-long consolidation zone.
Between those two areas, we've got the 100-day MA and year-to-date VWAP. So regardless of which direction you're trading, I expect increased participation (and volatility) from both buyers and sellers within that 110-handle zone. This contract remains a great place for active day timeframe participants to focus their efforts.
If you're uninterested in selling short or stalking a bounce, simply remain on the sidelines until the Nq is closing back above the 20-day MA. There's nothing wrong with staying in cash until the current correction runs its course, and price is once again exhibiting strength.
As far as the E-Mini S&P 500 futures (Es) are concerned, the contract gapped higher to begin Monday's shortened session, but after a couple hours of horizontal churning, demand faded and traders closed the majority of the overnight gap.
The only point I'd make in regards to the daily chart below is we're continuing to see traders fade (sell short) day timeframe rallies above the eight-day and 21-day exponential moving averages. This is a sign of short-term weakness.
Moving on to Wednesday's Es auction, we'll begin the session with a focus on 2426.50 to 2427.50. As long as we're trading beneath that one-handle zone our baseline expectation will be for bearish continuation toward 2416.75 to 2418.75. As 2416.75 (value from last Thursday's regular session) fails, all eyes shift toward 2400.75 to 2401.75.
A trade above 2427.50 is unlikely to spark a sustained rally toward 2434 and Monday's 2436.50 intraday high, but it could give dip buyers a bit of breathing room. For now, we'll operate under the assumption that all trading above 2427.50 encourages rotation between 2431.75 (Monday's opening print) and 2425.50 (Friday's opening print and the bottom of that session's upper balance area).
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.