Monday's session was far more interesting than what the 8-handle auction in the E-Mini S&P 500 futures (Es) would lead one to believe. To be fair, Monday's intraday range in the Es was nearly 12 handles. But when you consider that nearly all 1.2 million contracts traded between 2050 and 2058, I think we can all agree that the effective range was much closer to 8 points. Put another way, while the range in the Es wasn't huge, there was plenty of volatility to be found in other areas of the market.
A number of momentum stocks were hit particularly hard on Monday. Names such as Alibaba (BABA), GoPro (GPRO), Ambarella (AMBA) and Bitauto (BITA) all lost between 5% and 12%. Even Apple (AAPL), the one stock most responsible for driving the E-Mini Nasdaq 100 future (Nq) higher over the past six weeks, was hit with a barrage of selling.
In all fairness to Apple, the selling in its shares seemed to be closely tied to an onslaught of high-frequency trading (HFT) orders, as the stock fell more than 5.5 points in less than a minute. So much for HFT boosting overall liquidity.
Away from the high-octane momentum sector, we saw breathtaking rebounds in crude oil, gold and silver futures contracts. Unfortunately for energy-equity bulls, only the most conservative of energy names, such as Exxon Mobil (XOM), Chevron (CVX) and ConocoPhillips (COP), followed crude oil higher. Supply continues to weigh down the more speculative oil-services and offshore-drilling names. As a reminder, I listed a handful of higher-quality dividend-paying names in Monday's Trader Daily that investors seeking increased energy exposure might want to investigate further.
Despite the general hatred for all things precious metal related, the vast majority of gold and silver miners managed to follow the price of the commodity higher. Large-cap miners such as Goldcorp (GG), Barrick Gold (ABX), Newmont (NEM) and Agnico Eagle Mines (AEM) all rallied between 4% and 8%.
While it's true most miners still have a long way to go before they'll begin to look bullish, it's worth noting that gold futures have, for the time being, recaptured their moving averages both in the short and intermediate time frames. That can only be described as a bullish development. As we progress through the remainder of the current trading week, gold bulls will not want to see gold futures close back beneath the 20-day simple moving average, which is currently at around $1,180 per ounce.
1. One stock on my watch list for a multi-time-frame breakout is Fortinet (FTNT). If you take the time to flip through the daily, weekly and monthly charts of Fortinet, you'll find a stock on the verge of a major upside break. Now, since I have no interest in guessing whether sufficient demand will enter the market to push the stock higher, I will sit on my hands until, at a minimum, the stock closes a daily bar above the $28.50-to-$29 area. A weekly close above that $0.50 range would look incredibly bullish.
2. Unlike much of the stock market, IBM (IBM) has been flat-lining for the past six-plus weeks. While we should keep in mind that the stock was crushed after its most recent earnings report -- for genuinely poor results -- I think the bulls have a shot at some near-term upside action if IBM can close above $165. If the stock fails to close above that level, and it simply slides down through $160, I'll remove the name from my watchlist and look elsewhere.
3. After staging a rebound last Wednesday and Friday, shares of Twitter (TWTR) came under heavy fire during Monday's broad selloff. Having shattered the three-week uptrend line at Monday's close, my inclination would be to avoid Twitter altogether on the long side, or to stalk it for a short beneath the Nov. 11 $38.80 swing low.
4. It wasn't very long ago that we were discussing a long idea in the iShares Nasdaq Biotechnology ETF (IBB), but the winds appear to be shifting. Given Monday's selling in a number of recent momentum darlings, I want to keep an eye on the IBB for weakness beneath the $296.60-to-$295 area. Failure to hold above that relatively narrow band will make the late-November break above $300 look like a fake breakout. Any near term follow-through to Monday's selling in the Nasdaq and Russell 2000 would have me looking for selling in the IBB.
5. Please check Columnist Conversations prior to Tuesday's regular-session open for an updated Es volume profile and trade plan.