Friday's auction wasn't driven by declines in shares of McKesson (MCK) , AmerisourceBergen (ABC) , Amgen (AMGN) or Growth Seeker portfolio name Amazon (AMZN) . Similarly, few traders seemed to care about the strength in shares of Royal Caribbean Cruises (RCL) , Baker Hughes (BHI) , The Hershey Company (HSY) or Eastman Chemical (EMN) .
All anyone wanted to talk about after roughly 1 p.m. was the shocking announcement that the Federal Bureau of Investigation (FBI) was restarting a probe into Secretary Clinton's emails.
Let's set aside our individual political leanings for a moment and consider things solely from a financial (trading) point of view.
I believe most would agree that the market had become increasingly comfortable (or accepting) with the prospects of a Hillary Clinton administration. The market seemed to have gained a certain degree of certainty in regards to how a Clinton administration might affect the stock market. Friday's announcement by the FBI's does nothing to comfort participants looking for political certainty. And we all know what happens when uncertainty creeps into the market place. Assets need to be repriced.
No chart more clearly illustrates the impact of Friday's announcement by the FBI had than the 5-minute intraday chart above of the Mexican peso futures (Px) and E-Mini S&P 500 futures (Es). As you can see, both instruments began to decline around the same time Friday afternoon.
Let's move away from pesos, but stick with currencies for a moment. An active and long-time Real Money reader requested a multi-month intermediate timeframe view of the CurrencyShares Euro Trust ETF (FXE) . However, unless your intention is to try and scalp the multi-month range, I see very little reason for direction traders to get involved in the FXE.
The first FXE chart above clearly shows the relatively narrow and well-balanced range the FXE has traded within since early January 2015. During that time, 70% of trade volume has occurred between approximately $106 and $111. Taking into account where the FXE closed out last week, I wouldn't fault a range trader for getting long near current levels and targeting levels closer to $111. From a directional or trending standpoint, however, there's little to go on.
The second and longer-term chart of the FXE depicts an instrument stuck in the middle of a horizontal consolidation that should probably be left alone. In a nutshell, I can't find a worthwhile edge in getting long (or short) the FXE near current levels.
Moving on to Monday's Es auction, I want to begin by noting my short and intermediate timeframe views of the market haven't changed one iota over the past week. I continue to believe downside risks far outweigh the risks of a near term rally back toward 2180 and new swing highs.
We'll begin the week by focusing on 2123.75 to 2124.75. As long as prices are beneath the mid-2120s, our baseline expectation will be for downward pressure toward 2117 and Friday's 2112.50 intraday low. As value shifts beneath 2117 to 2118, traders will be expected to position themselves for bearish continuation toward 2107.75.
A sustained trade above the mid-2120s has the potential to attract a swarm of day timeframe buyers. I'd be very careful trying to fade their bids too quickly. All trading above 2124.75 targets 2131 and 2133.50, and that's where I'd expect supply to re-enter the market.
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.
