Good Morning Traders!
Welcome back from an extended Memorial Day weekend…Hope you enjoyed some R&R. I spent the weekend with friends enjoying the Northeast’s first major Regatta colorfully named: FIGAWI to kick off the official start of summer season on Cape Cod and the Islands (Martha’s Vineyard and Nantucket).
So…Where the FIGAWI in the Markets? New Contract Highs in S&P 500 e-mini!!
Bulls used the slow holiday weekend to push the SP500 e-mini futures to all-time contract highs…The key will be whether or not these new highs can be sustained. We have been giving the benefit to the bulls for quite some time, correctly so, though with recent divergence with 10 year bonds yields, there seems to be at least a short-term disconnect (yields down….equities higher). Their normal historical relationship is expected to realign at some point…We’ll let Mr. Market figure out the proper timing. In the mean time, we continue to “trade what we know and verify what we see.”
As price have continued their trek higher, volatility has progressively compressed with the VIX at 11.36 and the Average Daily Range (ADR 5) now at 10.50. Complacency has definitely set in with investors/traders which typically is a harbinger of price corrections, so we must maintain strict discipline and vigilance.
Let’s get to the numbers:
IF price continues to expand above the Prior Day high (1904.75 and convert, THEN initial upside targets measure between 1906 – 1907.50, with the next zone between 1910 – 1912.50, followed by extremes 1914.50 – 1916.00. Failure to sustain current buying price is vulnerable to pullback to 1896 – 98 zone…Next major confluence of accepted activity is within 1890 – 1893 zone.
We anticipate continued relatively light volume across markets today and will update dynamic S&R levels throughout the session.
Remain Focused on the Trading Process….Not the Outcome ALWAYS USE STOPS!
Good Trading….David
Habitude Twelve
I am disciplined. I behave in a way to reach my goals. I do what I intend to do. I have the intent to win through right actions. I will be patient for patterns to emerge and mature. I am decisive. I decide easily and act promptly. I act in the right way and right on time. When there is nothing to be done, I will wait.