S&P 500 Futures Trading Outlook for July 25, 2016 – Monday is beginning quietly in a light news day amidst earnings releases. Stock market futures are neutral at the time of this writing indicating flat opening for the S&P 500 Index (INDEXSP:.INX).
Bullish formations continue as traders produced a bounce off the value area near 2163.5 on S&P 500 futures. This follows Friday’s hold of price support near 2156. Today, in the continuing bullish environment, the chart bounced after a shallow dip overnight. We now sit above the edge of congestion near 2169 with mildly bullish momentum- price resistance is between 2171.5 and 2177.25 for today. Breaches should fade back to congestion regions as we seem to be in consolidation. Price support to watch below is 2158, but the overnight low is higher at 2163.5. Below that, we see 2155.5 and 2145.5. Charts continue to work off very high momentum levels but not essentially losing any real traction. This still primes the pump for higher prices ahead in S&P 500 futures trading. That said, everything has to do with how well buyers manage the overhead supply here.
See today’s economic calendar with a rundown of releases.
RANGE OF TODAY’S MOTION
S&P 500 Futures Trading Chart (ES_F) – July 25
Upside trades on S&P 500 futures – Favorable setups sit on the positive retest of 2168.5, or a positive retest of the bounce off 2164 with positive momentum. Remember that the feel of the chart is congestion, so breakouts will be difficult to maintain. I use the 30min to 1hr chart for the breach and retest mechanic. Targets from 2164 are 2168.25, 2172.25, 2175.75, 2177.25, 2179.25, and if we expand, we may stretch above into 2181.75. But these charts do not look like they will expand without coming back to test their breach levels.
Downside trades on S&P 500 futures – Favorable setups sit below the failed retest of 2163.25 or at the first failed retest of 2167.75 with negative divergence. As this is still a relatively countertrend trade keep your eyes on the lookout for higher lows developing intraday. Retracement into lower levels from 2167.75 gives us the targets 2166.5, 2163.5, 2060.75, 2158.25, 2156, 2153.5, 2149.75, 2145.75, 2143, 2141.75, 2138.75, and 2136.75 to 2128.25, if sellers take over.
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Nasdaq Futures
The NQ_F is holding near breakout levels, just above heavy congestion between 4645 and 4656. This is generally a breakout behavior, but momentum is a bit flat. Dips are likely to be bought as moving averages and formations as a group look bullish. The NQ_F has yet to test prior highs and is lagging in performance to the ES_F, so there is room for buyers to chase this one as it tries to catch up with performance. New support is near 4640-4645, with a lower break into 4627, if sellers gain traction.
Upside trades on Nasdaq futures – Favorable setups sit on the positive retest of 4661, or a positive retest of 4649.75 with positive momentum. I use the 30min to 1hr chart for the breach and retest mechanic. Watch for the lower high to develop near 4656, if sellers exercise more power intraday with lower tests of support. Targets from 4649.75 are 4653.75, 4659, 4661, 4664.25, 4671, 4677.25, and 4681 if buyers continue the rally north. Price is likely to retreat to higher support at these breakout levels, so be careful.
Downside trades on Nasdaq futures – Favorable setups sit below the failed retest of 4649, or at the failed retest of 4664.25 with negative divergence. Watch those moving averages and trend lines when taking the shorts. Retracement into lower levels from 4664.25 gives us the targets 4662.25, 4659.25, 4654.75, 4651.25, 4645.75, 4641.5, 4636.75, 4632.75, 4628.5, 4624.75, 4621.25, 4618.75, 4615.75, 4614, 4611.25, 4606.75, 4598.75, 4592.5, and 4585.5 to 4580.75, if sellers resume control.
Crude Oil
Traders have been trying to pick a bottom here in crude oil since Thursday, but every bounce gets sold as trapped buyers leave positions. We meet a double bottom here on smaller time frames this morning, with buyers holding a key level that I suspect is on a lot of radars at 43.84. Momentum is negative, but divergent, as buyers try to pick a bottom here again. The key hold will be the breach above 44.5, and we are well below that currently. Above this area, buyers will try to lift the chart back into the 45 area.
Trading ranges for crude oil begin the week between 43.37 to 44.86, with most trading signals suggesting that bounces will fail.
Upside trades on crude oil are quite countertrend here, but they can be staged on the positive retest of 44.06, or at a bounce off 43.7 with positive momentum. I often use the 30min to 1hr chart for the breach and retest mechanic. Targets from 43.7 are 43.83, 44.03, 44.22, 44.49, 44.72, 45.03, 45.22, 45.45, 45.72, 46.01, and perhaps, 46.3, if buyers really take control.
Downside trades on crude oil can be staged on the failed retest of 43.8, or at the failed retest of 44.5 with negative divergence. Targets from 44.5 are 44.37, 44.29, 44.16, 44.04, 43.84, 43.68, 43.48, 43.37, and 42.7, if selling really takes hold.
If you’re interested in watching these trades go live, join us in the live trading room from 9am to 11:30am each trading day. It is now primarily stock market futures trading content, though we do track heavily traded stocks and their likely daily trajectories as well – we begin at 9am with a morning report and likely chart movements along with trade setups for the day. Visit TheTradingBook.com for more information.
As long as the trader keeps himself aware of support and resistance levels, risk can be very adequately managed to play in either direction as bottom picking remains a behavior pattern that is developing with value buyers and speculative traders.
Twitter:Â Â @AnneMarieTrades
The author trades stock market futures every day and may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
