The Index Futures
Each evening we focus on the most interesting aspects for the upcoming trading day. The comments are based on observations of the nightly updates of the Futures and Market Bias pages. They are provided for educational purposes only and are not intended to be direct trading advice. Also, keep in mind that these remarks are made up to 12 hours in advance of the markets opening. Therefore, overnight events may alter the outcome of these observations.
Wow, what a week for the index futures. Obviously, we are overbought here but just because we are overbought doesn’t mean we can’t go higher. Therefore, don’t fight the tape until there are some signs that the market may be correcting. I suggest watching the Market Bias Page for 3 or more indicators pointing lower before attempting to short the index futures.
Tonight, you’ll notice that many of the markets are either in breakout or breakdown mode. Use caution as you play these as the masses of trend followers tend to pile on. Also, as I often mention, its usually safer to wait for a pullback. The tradeoff is that you may miss part of the move.
For you breakout players (or more appropriately breakdown players), the grains –November Soybeans [SX9>SX9], December Corn [CZ9>CZ9] and September Wheat [WU9>WU9]– all sold off poorly to hit and close at life of contract lows. Of the three, Wheat looks least extended and may have additional downside. Look for shorting opportunities here or better yet wait for a pullback to enter.
August Heating Oil [HOQ9>HOQ9], on the Momentum 5 List, closed at new highs (a) and is just shy of 9 month highs. Look for a buying opportunity here as it may play catch up to Crude [CLQ9>CLQ9] and Unleaded Gasoline [HUQ9>HUQ9], which both hit and closed at one year highs today.
Source: Omega Research.
September Coffee [KCU9>KCU9] and September Orange Juice [OJU9>OJU9] are also breaking down to life of contract lows. As with the grains, look for shorting opportunities here or better yet, wait for a pullback to enter.
Volatility Watch
The September Japanese Yen [JYU9>JYU9], continues to be on the Volatility Explosions-Multiple Days List. Continue to watch for a larger-than-normal move as volatility reverts back to its mean.
Best of luck with your trading on Tuesday!
Dave Landry
PS-Reminder: Protective stops on every trade!
PPS- HAPPY 4TH of JULY!