Every session has its winners and losers. But seeing large-cap stocks like Discovery Communications (DISCA), Disney (DIS), Time Warner (TWX), Viacom (VIA.B), Twenty-First Century Fox (FOXA) and Comcast (CMCSA) decline between 12% and 4.6% is pretty concerning.
Even more shocking is the fact that all major indices finished the day in the black. As everyone already knows, the major indices are doing a spectacular, if not confounding, job holding near recent highs while many stocks, and not just oil and mining names, continue to sell off. Suffice to say, this is an incredibly difficult market to navigate on a day-to-day timeframe.
Before we get to Thursday's E-Mini S&P 500 futures (Es) trade plan I want to address a question I received from a reader. His question revolved around the major indices and, more specifically, which index I believe looked the most vulnerable.
I noted in Wednesday's Trader Notebook that both the iShares Russell 200 ETF (IWM) and SPDR Dow Jones Industrial Average ETF (DIA) were trending lower. But between the two, I believe the DIA looks most vulnerable to a bearish break. Realistically, I doubt any index will be able to hold near current levels if one of the majors breaks meaningfully lower. But given the amount of time the DIA has spent beneath its 50-day exponential moving average (EMA) -- and to a degree the 200-day EMA -- over the past month this is the index I'd label as having the most imminent downside potential.
Moving on to Thursday's Es auction, let's not forget about Friday's employment report. I doubt anyone will be in too great a hurry to place large index related bets ahead of that report. A very-short-term, day-timeframe mentality is likely to remain firmly in place.
The Es has spent the past six sessions rotating between roughly 2104/2107 and 2080. Until value migrates beyond that zone I see little reasons to expect anything more than two-way chop. So, with that in mind we'll begin Thursday's session with an eye toward 2106.25 for responsive sellers and 2078/2080.50 for responsive buying.
There's obviously a lot of room between those two areas of interest, so for the day traders out there my inclination is to use 2097.50 as an intraday pivot. All trading above that level encourages upside probes of 2104.25-2106.25. While everything beneath it shines a light on 2086.75 and our lower major area of interest.
Any trading or volume profile related questions can be posted in the comments section below, e-mailed to me at email@example.com or posted to my Twitter feed @ByrneRWS