Good Morning Traders!
The week after triples normally experiences selling, but Tuesday started out with a twist as an early Open Drive in the Small caps and Nazdaq led the SPs up to new contract highs. As seems to be the case these days, the rally was over shortly after the first hour and profit taking in overbought in oils and oil services was the straw that broke the camels back. Check out the chart above to see just hoe far these sectors have come. Tuesday’s selling was a bit of a wake up call to the bulls and there is likely to be overhead resistance now from the intraday trap that was laid. The indexes closed with 15 minute grail sales overhead. Though the Russell corrected a long ways down already, there is still room for a further retrace to the daily EMA as is often the case after sell divergences. On Monday the only thing missing was a test or lower high on the 120 minute charts and that was put in place on Tuesday.
Bonds and tens had an upside breakout from an intraday triangle but both are up against the top of a trading range. Aggressive traders can look to short any poke above this range or short against the double top that might form ( 5 day look back). In the past we have seen some positive correlation again with tens and yens but Tuesday’s rally attempt was feeble. There are 10 bars price overlap on the daily charts now with converging trend lines on the intraday. This does not guarantee the start of a new trend bit a test of the ten day high OR low is likely.
I will be gone Wednesday afternoon – Sunday evening. Mick will be holding down the fort and posting trade sheets and chart examples for everyone. Please feel free to provide your input during the day to him!
Wishing everyone a great week!