Aside from Wednesday's intraday rally following the FOMC meeting announcement, last week's E-Mini S&P 500 futures (Es) was pretty dull and directionless. Prior to Wednesday's intraday rally, nearly 70% of the week's volume occurred between 2132 and 2141.50. The trading was, as you probably remember, range bound and choppy.
If we remove Wednesday's intraday rally from the equation, the final two trading days of the week were equally dull, though a bit less range-bound. While the Es did gap higher to begin Thursday's auction, there was no regular session follow-through, and price ended the session essentially where it began it.
Friday's session provided some relief for traders that had been fading the post-FOMC rally, but even when you consider the contract ended Friday's session nearly 10-handles beneath Thursday's closing print, I don't believe bears have (yet) earned the right to be given the benefit of the doubt.
As we begin the new trading week, I believe it's important to recognize the importance that bulls defend prices between 2145 and 2150. Take a moment to review the four-hour Es chart above, paying particularly close attention to how consistently price was rejected in and around the five-handle zone, before crashing beneath it on Sept. 9. With price recapturing that zone following the Wednesday Sept. 21 FOMC meeting announcement, it's imperative that bulls not allow price to gain acceptance back beneath the mid-2140s.
Before we get to Monday's Es trade plan, let's take a moment to discuss Action Alerts PLUS charity portfolio holding Facebook (FB) . Several readers asked for an opinion in regards to stock's decline following the company's disclosure that it may have overstated the amount of time viewers spent watching videos on the social media web site. Since we've no idea how advertisers are going to react to this rather embarrassing blunder by Facebook's management, all we can do is rely on the chart.
It's easy to see how resilient buyers have been while price is closing above the 21-day exponential moving average (EMA). So in an attempt to keep things as simple as possible, I would simply avoid adopting even a short-term bearish posture as long as the stock continues to hold that moving average. If the 21-day EMA is lost, a quick drop toward $125 and the 50-day simple moving average (SMA) is probably in order.
Moving on to Monday's Es auction, our primary area of interest will be 2144.50 to 2151. As mentioned above, I believe that's the "do or die" zone for bulls. As long as any probe of that zone is promptly rejected, an eventual push toward new swing highs is a reasonable expectation.
In the event buyers show up at Monday's open, hold the line near 2156.75 and quickly recapture 2163.75, our attention will immediate shift toward 2171.25 and 2178 to 2179.50. A break above the mid-2160s is not something I'd be in a hurry to fade. But an initial test of the upper-2170s is not something I'd expect to gain acceptance.
Any trading or volume profile related questions can be posted in the comments section below, emailed to me at email@example.com or posted to my twitter feed @ByrneRWS.