Four Indicators Pointing Lower
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.
At the time this is being published, the S&P Globex Futures are trading .20 points lower and the Bond Market Futures are trading up 2 ticks.
In the previous Outlook (Friday), I spoke about how we were overbought and we should begin watching for 3 or more signals pointing lower on the Market Bias Page for a chance to short the index futures. Well, tonight have 4 indicators pointing lower. This combined with the fact that the major indices hit all time highs today but subsequently reversed suggests that the indices have begun to correct. Look for shorting opportunities in the September S&P [SPU9>SPU9] and Dow Jones [DJU9>DJU9] futures.
Of the two indices mentioned above, I especially like the Dow Jones Futures as they have stalled just above their old highs (a). This gives the appearance of a possible double top forming.
Source: Omega Research.
For you breakout players (or more appropriately, breakdown players), the September British Pound [BPU9>BPU9], on the New 10 Day Lows List, gapped lower and sold off to major new lows. Look for a shorting opportunity here or better yet, wait for a pullback before entering.
September Coffee [KCU9>KCU9], mentioned on Friday and down 6.00 today, sold off to hit life of contract lows again today. Continue to look for a shorting opportunity here or better yet, wait for a pullback before entering.
Volatility Watch
Even with today’s sell off in the September Japanese Yen [JYU9>JYU9], it still remains on all three Volatility Explosion Lists. Continue to watch for a larger-than-normal move as volatility reverts back to its mean.
Best of luck with your trading on Wednesday!
Dave Landry
PS-Reminder: Protective stops on every trade!