As slow as Monday's E-Mini S&P 500 futures (Es) auction was, Tuesday's was even slower. Es traders endured a sub-eight-handle session with fewer than 930,000 contracts changing hands. That, for the uninitiated, is painfully slow.
Away from the Es auction, the trading was a bit more active for those involved in the Mini Russell 2000 Futures (Tf) and iShares Russell 2000 ETF (IWM) auctions. Unfortunately, the IWM is still trapped between the $120 to $121 resistance zone and $119 support we discussed on Monday. So while the day time-frame rotations offered more opportunity than that found in the Es auction, the near-term trend is still pretty flat.
On another note, I received several emails from readers and active traders asking why the bears consistently fail to capitalize on opening weakness. My simplistic response was that as long as price is closing above our short and intermediate time-frame moving averages, any and all bearish gaps should be expected to attract dip buyers. And while I know this will infuriate those with a fiercely held bearish bias, the bottom line is the trend is still bullish. The bears are consistently failing because the higher time-frame trend isn't even neutral. It's bullish.
Sticking with a simplistic, technical approach to measuring trends has a tendency to keep you on the right side of the market the majority of the time. So, if you're among the frustrated many champing at the bit to sell the Es short, I would encourage you to both recognize the current trend is not bearish, and accept that no one knows when or where the market will put in a meaningful top. As difficult as it is to remove emotion and bias from trading, it is far less frustrating, and costly, to either trade in the direction of the trend (within your time frame) or remain on the sidelines until the auction begins to move in a manner consistent with your bias.
Two subjects of recent reader inquiries, Vale (VALE) and copper futures, both have promising charts. But I want to begin with a chart of copper futures since that market looks particularly interesting.
We've reviewed the chart of copper several times over the past couple of months, but now, finally, it's beginning to break higher. Breaking through the topside of its consolidation pattern is clearly bullish. Moving past the yellow dotted line would confirm the break and likely find traders targeting levels close to $2.50
As far as VALE is concerned, the stock continues to churn above its 200-day simple moving average, and both the 50-day and 100-day SMAs have begun trending higher. In a nutshell, the stock has an increasingly bullish look. Unfortunately, it's not near a level where I'd consider getting involved. A dip toward the 50-day and 100-day SMAs (roughly $4.55) would offer an acceptable entry, perhaps with a stop under $3.85.
Moving on to Wednesday's Es auction, we'll look to focus our sights on 2162.50 and 2151.25, and hope for a break of this narrowing trading range.
A sustained break (30-minute bar close) of 2162.50, representing the upper end of accepted prices over the past four trading sessions, is obviously not something I'd be in a hurry to fade. Such a break would likely trigger a quick response from initiative buyers given the market's consolidation over the past four days. Only a rejection of levels above 2162.50, and a sustained trade back under that figure, would offer hope to short-sellers.
A dip beneath 2151.25 would refocus our sights on 2143.75 to 2145.75 and 2133.75.
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