Posts by Rod David
Look ahead: Economic Calendar – for Wed Dec 14, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Wednesday morning’s calendar is busy, and also both high-profile and influential. But the highlight is the afternoon’s FOMC events, with its long-awaited rate hike AND the year’s final quarterly Q&A with Fed chair Yellen — both reliable opportunistic with volatility and multiple sizable moves.
MBA Mortgage Applications
7:00 AM ET
*PPI-FD
8:30 AM ET
Retail Sales
8:30 AM ET
Industrial Production
9:15 AM ET
Business Inventories
10:00 AM ET
EIA Petroleum Status Report
10:30 AM ET
*FOMC Meeting Announcement
2:00 PM ET
FOMC Forecasts
2:00 PM ET
*Fed Chair Press Conference
2:30 PM ET
Afternoon Bias
| TUE afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2271.75 | 2266.50 |
| …would target | 2277.00 | 2272.00 |
| Bias-down: under | 2265.50 | 2260.50 |
| …would target | 2258.75 | 2253.50 |
| Signal status: waiting for trigger | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
1. At 1:20, 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 1:20 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 1:20 would invoke a grace period through 1:30 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 1:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.
Post-open Review… And the kitchen sink.
Probing above Sunday night’s high.
The opening bar touched yesterday morning’s 2259.00 high and extended quickly through it. Maintaining its recovery through 9:45 made the bias-up signal likely to trigger. Never mind that, as its 2261.25 bias-up target has been exceeded. And exceeding the 
bias-up target through 10:15 puts into play the next higher target. Never mind that, too, as that was at least 2266.50, which was tested already up to 2267.75.
A symmetrical triangle formed at the high. The pattern often breaks falsely in one direction, before reversing more substantially in the opposite direction. Its first break, whether or not temporary, was triggered under 2264.00 and has fulfilled its 2260.50 minimum objective. Probing under it has so far still overlapped it, and not broken lower.
Back above 2264.00 would signal fresh highs in-play. Retesting Sunday night’s high made 2270.00 likely to be tested, too. And that would be too shallow to qualify as a “more substantial reversal in the opposite direction.”
But the open’s high doesn’t require a retest. And anxiousness ahead of tomorrow afternoon’s FOMC policy statement is eerily absent, as buyers throw everything AND the kitchen sink into the rally. Exiting the bias environment at 11:30 back under 2259.00 wouldn’t itself be a sell signal, but it would undermine the upside momentum
Pre-market Tour (recording & summary)
The overnight rally has extended to retest yesterday morning’s 2259.00 high by 2 ticks. If tested post-open, then maintaining or rejecting it through the 9:45 could be predictive of the next leg — either up to probe Sunday night’s highs above 2265.00, or down at least to fill the gap back to yesterday’s 2251.50 cash session close. Still overlapping 2259.00 won’t qualify either way. Gapping up to the test makes it all the more difficult, and all the more relevant.
Details and other markets coverage are discussed in the pre-market Tour recording here.
The First Trade… Counter-counterintuitive.
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…
Despite Sunday night surging 10 points to new highs attacking 2265.00, Monday’s open back under Friday’s highs 2254.25 had isolated the new highs to the overnight session. A post-open surge to 2259.00 was retraced in time to somewhat similarly isolate it. After extending down to test 2247.00 during the noon hour, the balance of the session hovered 1 point higher in negative territory.
Overnight action’s new info…
A quick dip back down to Monday afternoon’s 2247.00 lows was recovered back up to the afternoon’s highs. Its resistance began melting away ahead of Europe’s opens, but that’s when it disappeared altogether. Now yesterday’s post-open surge has been retraced to within 1 point at 2258.00.
If, then…
An observation we’ve discussed here for a couple of months is that the market seems very willing to embrace getting past the long-anticipated rate hike. Think in terms of ripping off the band-aid, or meeting future in-laws. I’ve noted this whenever strong economic reports have at least temporarily triggered a price surge that previously would have triggered selling. Well, tomorrow afternoon’s FOMC policy statement brings an opportunity to get the event behind us.
…Regardless of the knee-jerk reaction, pessimism should at some point be expressed by selling. Crouching defensively at some point ahead of the news would be appropriate, too. Yesterday’s dip was too modest to qualify as pessimism. As noted, Monday’s patient pessimism and ineffectual optimism were only potentially bearish from a contrarian perspective, and not yet outright bearish.
…So, why the overnight bounce? Consider its source. The optimism seems more inspired by the relative favor bestowed by a domestic rate hike. Will Tuesday’s intraday crowd buy into that sentiment and continue marching higher post-open with a stiff upper-lip? Their reward could be a retest of Sunday night’s 2265.00 high, and also to neutralize the “unfinished business above” of an eventual new trend high close. That would be a trap, to remove upside attractions when they’ll be needed most. Reversing back down this morning could still be part of a multi-session pullback, with likely objectives of 2215.00 and probably also 2205.00.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2259.00 would be likely to trigger the 2256.50 bias-up signal at 10:15. Exiting the open under 2253.25 would be unlikely to trigger bias-up.