Good Morning Traders!
Thursday is Roll day for the index futures, though many still trade the June contracts through the end of the week.
SPs gapped lower out of the three bar triangle formation, but volume was light and neither an uptrend nor downtrend developed after the large opening gap. There is a pinball Buy for Thursday, as well as the first close below the 5 SMA. Both of these patterns are less reliable after a three bar triangle has formed, but the 120 minute time frame has excellent structure showing the A B C corrective rhythm down.
Of concern, is the overbought 5 day moving average of the closing ticks. The Summation Tick is also overbought and even has a double top in place. Add to this the terrible action in charts like IBM, BA, DE, HD…. The rally is being supported by financials, drugs and oil shares but many of these are getting overextended. The narrow based Nazdaq is over weighted with AAPL, AMZN, MSFT and GOOG while the DOW is over weighted with V, IBM, and GS. Thus in tricky times of rotation, default to the Russell for confirmation/non confirmation. So to recap, the model says Buy Day for all index futures. This is coming against a headwind of overbought tick indicators.
The Crude has an excellent 120 minute chart formation. Yen suggests a Sell Short day. The EC is also quite oversold. There are no compelling chart formations though.
Wednesday was an extremely light volume day. Need to see an increase in volume to push the market outside of this range it is forming up here!
Careful with cross current rolls – Happy Trading!