I'd love to blame Tuesday's regular-session decline in the E-Mini S&P 500 futures (Es) on the after-hours share-price declines of Edwards Lifesciences (EW) , Chipotle Mexican Grill (CMG) and Apple (AAPL) , but that's just not realistic. I believe it's equally unrealistic to say the regular-session weakness in shares of Under Armour (UA) , Sherwin-Williams (SHW) , Whirlpool (WHR) or General Motors (GM) were to blame. (Apple is part of TheStreet's Action Alerts PLUS portfolio. Under Armour is part of the Growth Seeker portfolio.)
I believe Tuesday's lack of bullish price extension was simply another unpleasant reminder that we're trapped in a lifeless, directionless and horizontal auction. And while we all yearn for some inkling of an idea when this chopfest is going to morph into a clearer trend, the market's rarely that accommodating.
Monday's close above the 21-day exponential moving average in the Es contract gave buyers some incremental hope that we might be able to string together a few positive days in row. We even entered Tuesday's auction with an eye toward buying a dip between 2138 and 2139. That dip, however, failed to attract a worthwhile buyer. And the contract ended up closing the session at 2138.50. The best we can say is at least dip buyers didn't get run over during the day timeframe.
Away from the Es, I suspect day timeframe traders will shift their focus back toward the iShares Russell 2000 Index ETF (IWM) at Wednesday's open. Because while the Es continues to stumble each time it attempts to push toward its 50-day simple moving average (SMA), the IWM is less than a dollar from looking downright treacherous. An intraday break of $120 is an incredibly obvious line in the sand that I believe many participants have highlighted on their charts. If you want something a bit less obvious, allow the stock to close under $119 to $120 before coming to any bearish conclusions.
Moving on to Wednesday's Es auction, day timeframe scalpers are expected to enter the auction focused on 2141. As long as price is holding beneath that level, repeated attempts to break beneath Tuesday's 2135.25 intraday low are to be expected. As Tuesday's lows are cleared, a door toward 2129.25 and 2123.25 to 2124.25 is opened.
Given how unpredictable the day-to-day volatility has been, we mustn't ignore the obvious potential for traders to return Wednesday with a desire to bid prices higher. As price gains acceptance above 2141, we'll shift our focus back toward 2148 to 2150. As prices clear 2150, 2158.25 to 2160 becomes our next major objective.
Any trading or volume profile related questions can be posted in the comments section below, emailed to me at parkcityyeti@gmail.com or posted to my Twitter feed @ByrneRWS
