Regular session trade volumes may be light, but that isn't stopping the bullish march higher. For those keeping track of such things, Wednesday's regular session E-Mini S&P 500 futures (Es) volume came in at an anemic 775,000 contracts. And intraday travel (the high to low range between 9:30 a.m. and 4:15 p.m.) came in at 10.5 handles. An overall slow and narrow-ranged session, but bullish nonetheless.
Before we get to Thursday's Es trade plan, I want to review an updated volume profile for gold futures. Despite the dire and often silly predictions that tend to accompany any discussion of gold and silver, I think the metals are starting to look a bit better. The price action around gold and silver tends to be herky-jerky and extremely emotional, but overall, we may see this group come back to life during the early part of 2015.
For the first time in several months, the price of gold is back above the 50-day simple moving average (SMA) and at the same time the Relative Strength Index (RSI) is back above the 50-center line. This could obviously reverse, as it did in mid-to-late August. But until such a reversal unfolds, I'd rather give buyers the benefit of the doubt. For now, I think a realistic upside resistance target is $1245 (highlighted in green on the chart above).
In my view, gold bugs can remain optimistic as long as price remains above the 20-day SMA. A close back beneath that moving average and I'd probably have one foot out the door. And as far as a line in the sand is concerned, I'd focus on that $1177-$1180 low volume area of rejection (marked in red on the chart above).
As far as Thursday's Es auction is concerned, our overall bias is expected to remain bullish as long as demand remains intact above 2067 composite value. Value migration above the low-2070s would keep the bulls moving toward their next major target of 2100.
A failed trade (on a 30-minute bar basis) from 2067 pushes us back into a balanced situation, where our focus would shift back toward fading the edges of near-term composite balance (roughly 2059 -- 2072). For now, we'll need to see a collapse beneath 2059.5 and session close beneath 2050 to begin considering more aggressively bearish scenarios (such as a slide back down toward the low-2020s).
- For those following IBM (IBM) on either an intraday or multi-day timeframe, please note the monstrous move in the stock price during the last hour of Wednesday's regular session. The stock managed to break out of its short-term triangle consolidation, and the downtrend line stretching back to Oct. 31. From a short timeframe perspective, this would probably be a fine stock for momentum traders to keep on their screens, as the 50-day simple moving average ($171-ish) appears to be a logical near term target. As far as a stop loss is concerned, I wouldn't want to see the stock close back under $161-$161.50.
- The recent sell-off in energy stocks has traders and investors of varying timeframes scouring the patch for value, and while I believe several names are worth stalking (these were introduced in Monday's Trader Daily), I would implore everyone to proceed with caution. Be honest with yourself in regards to your risk tolerance, and realistic in determining your timeframe. If you have a short time horizon, and are generally uninterested in taking long shots, you probably have no business buying shares of any oil stock that's lost more than 30% to 50% of its value over the past couple months. If, however, your time horizon is measured in months or years and you're willing to endure a bumpy ride, then take the time to investigate some of the dividend-paying names listed in Monday's Trader Daily. If you've got the tolerance, look beyond the dividends and focus on higher production growth companies like Pioneer (PXD) and EOG Resources (EOG).
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.