The Fed and Narrow Ranges

PB View

Today is all about Fed Chairman Ben Bernanke, who testifies before lawmakers at 9:00am CT. However, keep in mind that Bernanke’s prepared remarks will be released at 7:30am CT – an hour before the markets open.

Most markets I follow are in holding patterns ahead of the two-day testimony, and breakouts are sure to come. Direction is still anyone’s guess. There’s no denying the overriding bull trend that the markets have experienced. At the same time, Tuesday’s decline could be a precursor to more downside ahead. In either case, the markets have developed some great levels to watch and trade by over the last few days, which will help to confirm direction.

Keep an eye on Crude Oil and Gold. Both of these commodities are experiencing multi-day compression ranges, which forecasts the next phase of price expansion. As a matter of fact, each has formed a 5-Day Narrow Range setup, which carries with it high probability odds of a breakout move ahead.

Cheers!

Frank Ochoa
PivotBoss | Own the Market

Follow me on Twitter: @PivotBoss
______________________________________________________
This daily report is currently free and open to the public, as I gather feedback and ideas ahead of a formal subscription offering later in the summer. If you have any feedback regarding anything in the report (good or bad) please provide it below in the comments section. Your comments will definitely help shape the report for the better. Thank you!

E-Mini S&P 500

In yesterday’s ES report I wrote, “If the ES cannot stay hold the 1674.25 level, and especially yesterday’s low of 1672.75, we could see a push toward 1669.50 and 1666.25.”

The ES opened Tuesday’s with a retest of Monday’s high at 1679.50, but was quickly rejected. This set the tone for the rest of the session, as price broke through 1674.25 and marched toward our target of 1666.25. Price came within 1 tick of this target, reaching a low on the day at 1666.50.

It’s interesting to note that the ES has formed its first lower value pivot range relationship in nearly two weeks, which has a bearish bias for today’s session. However, price needs to break below the 1665 level in order to confirm weakness into last week’s open gap.

Keep in mind, the ES is only trading an average of 12.50 points per day, which means our primary daily targets are much closer than they’ve been recently since volatility has dried up. Look for downside targets at 1663.75 and 1660.50, and upside targets at 1675 and 1678.25.

If we see a solid breakout today, look to play to 1681.25 and 1684.25 on the upside, and 1657.50 and 1653 on the downside.

Here’s the day’s economic calendar:

7:30am CT Building Permits
7:30am CT Housing Starts
9:00am CT Fed Chairman Bernanke Testifies
9:30am CT Crude Oil Inventories
11:30am CT FOMC Member Raskin Speaks
1:00pm CT Beige Book

Here are the Key Levels and Targets for the current session:

PivotBoss Levels & Targets: E-Mini S&P 500 (ES)
Jul 17, 2013
KEY LEVELS		ADR TARGETS
1,685.75	YTD High	ADR (5)	ONH	ONL
1,684.25	Fib Ext	12.5	1,673.00	1,665.75
1,679.75	LVN	AWR (10)	WH	WL
1,679.50	PD High	51.25	1,679.50	1,665.75
1,677.50	VPOC
1,673.00	LVN/RTH MP	DAILY TARGETS		WEEKLY TARGETS
1,671.50	SETTLE	BULL	BEAR	BULL	BEAR
1,670.00	HVN	1,681.38	1,666.75	1,717.00	1,641.06
1,666.50	PD Low	1,678.25	1,663.63	1,704.19	1,628.25
1,666.25	LVN	1,675.13	1,660.50
1,664.50	HVN	1,672.00	1,657.38
1,664.25	nVPOC	*BOLD indicates primary objectives
1,661.50	Fib Ext
1,660.50	LVN
1,656.00	HVN
1,652.25	LVN
1,648.75	Open Gap
1,644.75	cVPOC
1,644.50	nVPOC
1,637.25	HVN
1,635.00	nVPOC

 

E-Mini NASDAQ 100

In yesterday’s NQ report I wrote, “the current overnight range is only 5.5 points, and could be a precursor to more sideways trading, or an actual early morning move. But by no means do I forecast a huge trading range for today’s session.”

The E-Mini NASDAQ 100 opened Tuesday’s session with an early rejection of the 3080 level and eventually sold off back to the 3064 level, where buy programs were active on three separate tests of the level. But after all was said and done, the NQ had only amassed a range of just 16.50 points when it had been averaging a shade over 30 per day. Clearly, the NQ is coiling ahead of the next key move, which could be upon us soon.

The 3064 level offers a great zone to watch for a violation today, as a break of this level could push price toward 3057.50, 3055, 3047.75. If 3064 continues to hold, an early move above 3076 could forecast 3079.75, 3086.50, and 3094.

Here are the targets for the current session and the week ahead:

PivotBoss Levels & Targets: E-Mini NASDAQ 100 (NQ)
Jul 17, 2013
KEY LEVELS		ADR TARGETS
3,096.25	Monthly H5	ADR (5)	ONH	ONL
3,086.50	Fib Ext	28.5	3,076.25	3,065.50
3,080.25	PD High	AWR (10)	WH	WL
3,074.75	HVN	123.00	3,058.00	2,948.75
3,071.50	SETTLE
3,069.75	VPOC	DAILY TARGETS		WEEKLY TARGETS
3,063.75	PD Low	BULL	BEAR	BULL	BEAR
3,062.75	LVN	3,101.13	3,062.00	3,071.75	2,965.75
3,057.50	Fib Ext	3,094.00	3,054.88	3,041.00	2,935.00
3,056.75	nVPOC	3,086.88	3,047.75
3,051.50	HVN	3,079.75	3,040.63
3,048.75	LVN	*BOLD indicates primary objectives
3,033.50	LVN
3,029.50	nVPOC
3,025.50	LVN
3,011.50	HVN
3,008.00	nVPOC
3,006.50	LVN
2,997.00	Open Gap
2,995.00	nVPOC
2,991.00	cVPOC

 

Crude Oil

In yesterday’s Crude report I wrote, “Crude Oil continues to build out within the 104.20 and 107.00 levels, which is a range that could offer a major breakout opportunity ahead.”

Continued development within the now 5-day trading range has occurred in Crude Oil, clearly setting the stage for range expansion ahead. The daily chart shows a tight 5-day range, which has signaled a 5-Day Narrow Range setup. This setup looks to spot the narrowest 5-day range of the last 10 5-day ranges and big moves can occur when it develops.

The idea is not to guess direction, however. Wait for the market to decide direction, then act upon the move. Eventually a breakout through either 104.20 or 107.50 will occur. And when it does, we could easily see a 3- to 5-point move in Crude. Watch this range closely ahead.

Here are the targets for the current session and the week ahead:

PivotBoss Levels & Targets: Crude Oil (CL)
Jul 17, 2013
KEY LEVELS		ADR TARGETS
110.00	Yearly R1	ADR (5)	ONH	ONL
107.71	Monthly R3	2.20	105.85	105.11
107.46	LVN	AWR (10)	WH	WL
107.41	Fib Ext	6.78	106.90	104.65
106.94	PD High
106.80	LVN	DAILY TARGETS		WEEKLY TARGETS
106.67	LVN	BULL	BEAR	BULL	BEAR
106.05	LVN	107.86	104.75	111.43	101.82
106.00	SETTLE	107.31	104.20	109.74	100.12
105.90	HVN	106.76	103.65
105.70	PD Low	106.21	103.10
105.68	HVN	*BOLD indicates primary objectives
105.23	Fix Ext
105.02	LVN
104.37	LVN
104.20	LVN
103.52	Open Gap
103.36	Monthly R2
103.34	LVN
103.27	nVPOC
103.03	HVN

 

Gold

In yesterday’s Gold report I wrote, “Gold continues to hold right in the middle of the monthly pivot range, seen in the daily chart. As I mentioned before, this zone is a major crossroad for Gold, as a rejection at this level, or a breakout above it, will lead to the next major swing move.”

Like Crude Oil, Gold continues to build out within a very tight 5-day range, which has developed right in the middle of the monthly pivot range. As stated above, the fact that this range has formed at this spot in the daily chart indicates a major swing move will occur once a breakout occurs.

Gold has had a tendency to move major points lately, but the current compressed nature of the chart has dropped its ADR down to just 23.9 points per day. I expect this number to rise once a breakout is established.

Also, like Crude, Gold has formed a 5-Day Narrow Range setup, which means we could see a big time breakout soon. Watch the range below for an eventual violation.

Here are the targets for the current session and the week ahead:

PivotBoss Levels & Targets: Gold (GC)
Jul 17, 2013
KEY LEVELS		ADR TARGETS
1,316.50	Fib Ext	ADR (5)	ONH	ONL
1,315.80	34PEMA	23.9	1,292.70	1,282.80
1,301.50	Monthly TC	AWR (10)	WH	WL
1,298.30	Fib Ext	90.30	1,293.60	1,272.50
1,294.70	PD High
1,293.50	LVN	DAILY TARGETS		WEEKLY TARGETS
1,292.80	nVPOC	BULL	BEAR	BULL	BEAR
1,291.10	Monthly H3	1,312.68	1,280.75	1,362.80	1,225.88
1,290.10	SETTLE/VPOC	1,306.70	1,274.78	1,340.23	1,203.30
1,285.80	LVN	1,300.73	1,268.80
1,285.20	PD Low	1,294.75	1,262.83
1,283.70	nVPOC	*BOLD indicates primary objectives
1,283.50	cVPOC
1,281.60	Fib Ext
1,275.80	Monthly Pivot
1,272.50	LVN
1,260.80	LVN
1,255.00	HVN
1,254.10	nVPOC
1,243.60	LVN
1,234.20	nVPOC