Tuesday's auction was another rough one for bulls, though some bright spots could be found. Beaten-down names like Twitter (TWTR) and Ambarella (AMBA) made strong moves and managed to maintain their strength into the session's close. FANG members Facebook (FB), Amazon (AMZN) and Netflix (NFLX) all put in perfectly respectful performances on the day. In a nutshell, select tech and a handful of biotechs made it through the session with some decent gains, while much of the rest of the market finished in the red. (Twitter and Facebook are part of TheStreet's Action Alerts PLUS portfolio. Amazon is part of the Growth Seeker portfolio.)
What didn't fare so well were the transports, homebuilders and a number of banks. And of those three sectors, the transports were hit especially hard. Names like Southwest Airlines (LUV), Norfolk Southern (NSC), CSX (CSX), United Continental (UAL) and Delta (DAL) all declined between 3% and 9%. Even the iShares Transportation Average ETF (IYT) was hit for 2.8% on the day.
From a short-term trading perspective, we've seen buyers step into the IYT near $137 on several occasions dating back to early September. But short-term bounces aside, the higher time-frame trend is still bearish, as evidenced by the declining 200-day simple moving average.
On the energy front, much of the sector finished well off their morning lows. That said, I can't imagine anyone wanting to get too brave with crude oil or the energy stocks themselves until the January 2016 light crude oil contract is back above $40-$42.50. This, again, is a fine area for aggressive day time-frame traders to play in. But those focused on a higher time frame should remain on the sidelines.
Moving on to the E-Mini S&P 500 futures (Es) and Wednesday's regular session auction, we'll want to begin the session with a focus on 2069 and 2056.50. As long as value remains within that zone, day time-frame participants should avoid adopting an aggressively directional approach.
A sustained trade above 2069 opens the door to bullish price extension toward 2075.75 to 2076.75 and 2087.50. A drop in value beneath 2056.50 returns our focus toward 2047.25 and 2042.
As you're preparing for Wednesday's trading, note the relatively normal bell-shaped curve of Tuesday's profile. That would suggest a heavily responsive approach is warranted into Wednesday's session until value actually migrates cleanly outside our zone of interest. Put another way, don't be too quick to assume one side is ready to assume control and press an opinion.
Any trading or volume profile related questions can be posted in the comments section below, emailed to me at firstname.lastname@example.org or posted to my Twitter feed @ByrneRWS