Monday, July 11, 2016
Monday, July 11, 2016 #PreMarket Comments by Michael Blythe
Good morning. While risk/reward looks favorable for some 90+ dated puts on the equity index futures, the nearer term looks less inviting. Sure, most indicators reflect an oversold market, however on a micro basis, I am not interested in fighting this tape. Thus far, this summer has not seen a real volume slow down chop and now with Brexit out of the way the next 4-6 weeks could begin to slow down on a relative basis.
If it does, then shorting as a conviction will become increasingly difficult. Of course, with earnings season it’s possible that there could be some large volume down days that we must pay attention to from a less micro point of view but for the time being I’ll be limiting my short ideas to only accomodate low volume, range bound type trading days.
Levels I am watching lower are 2023 (*) Euro session Globex low and the overnight low of 2020 (*) the the 2016 (**) area from Friday’s midday low, which presents an appealing buy area 17 handles off the Globex high and then 2107 (***) that bulls will need to defend to maintain momentum.
Higher levels are 2129 (*) which is my early pivot, I feel very comfortable holding longs above this level as the 2133 (*) Globex high becomes first target followed by 2134 (**) which is the all time high on a continuous basis, next target is 2140 (**) and then the round 2150 (***) which will be an important weekly risk marker, partly due to some Fibonacci extensions that I only use when projecting prices never traded before.
I lean toward buying the open today, and letting it run as high as it will go or buying a pullback. With the economic calendar light and Globex volume closely resembling what recently amounted to range days, then if early volume is below the 20 day average for the first hour, I would consider a small short around 10-15 handles above the open if it matches close enough to my target areas.
All the best;
Michael Blythe
Futures Strategist
Hamzei Analytics, LLC
Friday, July 8, 2016
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