Posts by Rod David
Post-open Review… Path of least remaining resistance.
Gap up extends.
Reacting down pre-open from testing the 2267,25 bias-up target greeted the open with a blip-down to 2264.00. Its reaction was quick, and quickly extended up to 2269.50. That’s the highest level since last Wednesday afternoon’s initially favorable knee-jerk reaction to the FOMC statement.
It didn’t last this morning, either.
The reaction down to 2265.75 only overlapped the 2267.25 bias-up target at 10:!5, instead of exceeding it to renew the bias-up signal. It’s still a bias-up environment, with room back down to the 2262.00 bias-up signal just as noise. Back under 2265.00 (being tested now) would suggest a dip to 2262.00 is underway.
Having dipped to 2265.00, back above 2267.25 would start to signal the rally is extending. It’s too late to renew the bias-up signal, but extending higher anyway would target a retest of last Tuesday’s 2273.00 high. And the longer that takes, the less time available for a reversal to begin by Wednesday afternoon, when strong hands will already be positioned for the weekend holiday.
Pre-market Tour (recording & summary)
The overnight rally has extended up to this morning’s 2267.25 bias-up target. RSIs diverged negatively there, and price has reacted down to 2265.00. That’s still above the 2262.00 bias-up signal that had held repeated tests as resistance until Europe’s opens. So, trending this morning instead of ranging may depend on either renewing the bias-up signal above its target, or rejecting bias-up back under its signal.
Details and other markets coverage are discussed in the pre-market Tour recording here.
The First Trade… Sellers nearly marginalized.
Proper context can start the day with a solid win and make all the difference.
CHARTROOM LINK
(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Monday’s overnight rally to 2261.00 had been largely retraced before the open, and then fully retraced to Friday’s 2254.00 cash session close right after the open. That’s a lot of selling pressure to expend without yet even turning negative. In fact, it was all available selling pressure. Bullish WedEX’s influence exploited the vacuum and launched a surge back to the overnight high. Then another surge probed higher to attack 2264.00. A pullback into noon was largely recovered throughout the afternoon bias environment. The recovery seemed poised and even intent to resume the morning’s rally, when headlines triggered a complete retracement back to the morning’s low.
Overnight action’s new info…
Already bouncing through 2259.00-2260.00 through the cash session and futures close, Globex immediately firmed further to 2262.00. A narrow 2-point range broke higher at Europe’s opens, soon blipping-up to attack 2265.00. Its reaction down to 2262.00 has recovered to now probe higher up to 2265.50.
If, then…
The rally’s excuse for delay Friday afternoon was the president’s press conference stealing focus. Its excuse Monday afternoon was headlines of terrorist actions around the globe. The validity of either of these conditions is irrelevant, so long as this is true — Much has been thrown at this market since last Tuesday’s 2273.00 high, and yet it is repeatedly attacked to 5-9 points. This price proximity alone is enough to be confident in the high’s retest. That’s only helped by Tuesday’s proximity to the weekend holiday’s seasonal bullishness. Not already rallying at Tuesday’s open would have been vulnerable to at least attempting a deep corrective dip. But the open is indicated to at least test yesterday’s highs, if not also surge higher. A post-open reaction down may be the only path lower before next week.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2264.00 would be likely to trigger the 2262.00 bias-up signal at 10:15. Exiting the open under 2259.00 would be unlikely to trigger bias-up.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2265.00 | 2262.00 |
| …would target | 2270.00 | 2267.25 |
| Bias-down: under | 2257.25 | 2253.25 |
| …would target | 2248.75 | 2247.75 |
| Signal status: BIAS-UP, BIAS-UP TARGET MET | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
1. At 10:15, trading above the bias-up signal or under the bias-down signal would put into play a test of its bias-up or bias-down target.
2. Not triggering either bias signal at 10:15 would be “no-bias,” and the bias signals should define the bias environment’s range.
— A test of the opposite bias signal would be targeted if one bias signal was tested before triggering no-bias.
3. Touching the bias signal within 3 minutes either way of 10:15 would invoke a grace period through 10:30 to trigger a late signal.
— “Late” signals don’t require testing the opposite bias signal, but it’s still likely.
4. Still testing the bias signal at 10:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.
Post-market Wrap (recording & summary)
Were terrorist actions around the globe responsible for derailing Monday afternoon’s attempt at rallying to fresh highs? Possibly in the same degree that Friday afternoon’s presidential conference inhibited the bullish WedEX. Of course, Monday’s distraction was more serious, and the price reaction trended down instead of ranging sideways. But already rallying at Tuesday’s open would put into play new highs. Not already rallying at Tuesday’s open would be more vulnerable to launching a deep corrective dip before seasonal bullishness takes over into the weekend.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.