Posts by Rod David
Daily Spot…
A daily summary of high-profile members of several complexes… View a more detailed discussion of each chart at the end of today’s Market Wrap.
Eurodollar Mar Contract (EC, ETF: (FXE, UUP))
Blipping up sharply in reaction to Thursday’s ECB news was reversed back down more sharply Thursday morning, testing the 1.0650 pullback limit. Holding its test prior to probing fresh highs would have been bullish. Not holding its test after probing fresh highs is bearish. And it was broken down to 1.0600, where Sunday night’s drop to fresh lows was triggered. There is no active signal.
Gold Feb Contract (GC, ETF: (GLD))
Thursday’s shallow dip was similar to Wednesday’s brief probe above 1180.00, both reflecting restrained optimism, which can be bullish from a contrarian perspective — and which should behave very optimistically upon actually breaking above 1180.00. But the shallow dip must continue holding its test of the 1172.50 pullback limit.
Silver Mar Contract (SI, ETF: (SLV))
Gapping down Thursday held a test of the 17.00-17.10 pullback limit to maintain the upside momentum. But a second consecutive higher confirming close was not produced, so the rally effort cannot tolerate a second consecutive dip.
30-year Treasury Mar Contract (US, ETF: (TLT))
Wednesday’s narrow ranging around 151-05 had kept alive potential for resuming the decline, if done immediately, since Wednesday had needed already to resume the decline. Thursday’s gap down did not compensate for the delay because it did not extend lower intraday. Regardless, a second consecutive lower close Friday is needed to confirm.
Crude Oil Jan Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Still consolidating under the 50.50 pullback limit Thursday without extending down has kept alive the potential for rally back up to the 52.75 target. The optimal start would be sudden, steep and substantial.
Natural Gas Jan Contract (NG, ETF: (UNG, UNL))
Thursday’s muted reaction to the EIA report didn’t reflect the weakness that greeted it. Perhaps that is because a probe of lower lows overnight was recovered and isolated at the open. Still the intraday reaction was also shallow. There is no active signal.
Mid-day Update… Window shopping.
The rally holds and advances, one window at a time.
(Charts and price references all basis Mar.) It took its time today, but the rally has resumed. Or, is trying to resume
Fluctuating choppily around yesterday’s high lasted through the morning and into noon,
before finally starting to firm. And then suddenly surging. Now yesterday’s high has been probed by almost 9 points up to 2245.00 (basis Mar). This afternoon’s bias-up has triggered.
This morning’s bias-up signal was tested but not triggered. The grace period missed being invoked by only 1-2 ticks. So, an offsetting test of its its bias-down signal won’t be considered “unfinished business below.” This doesn’t mean it can’t be met, or won’t, sooner or later. But it’s not an outstanding attraction below.
However, there’s a new attraction above. It is this afternoon’s 2246.50 bias-up target, put into play by triggering the 2239.50 bias-up signal. It will become “unfinished business above” if left outstanding, unless the bias environment were to lapse under 2236.00.
Stay on high alert for the ongoing potential of reversing down sharply today. This risk won’t be any lesser tomorrow, but it would likelier recover if avoided today. Avoiding a sharp reversal down would also confirm yesterday’s break above 2220.00. Closing under it today would start to seal a top.
Look ahead: Economic Calendar – for Fri Dec 9, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: No pre-open reports means no reactions to pre-open reports that might inform us to how high-profile post-open reports might react. The high-profile post-open report is released simultaneously with another, making both likelier to generate a reaction. Meanwhile, this week’s rig count is greeting the Crude Oil market at a precarious point in its chart.
*Consumer Sentiment
10:00 AM ET
Wholesale Trade
10:00 AM ET
Baker-Hughes Rig Count
1:00 PM ET
Afternoon Bias
| THU afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2245.25 | 2239.50 |
| …would target | 2252.25 | 2246.50 |
| Bias-down: under | 2236.75 | 2231.00 |
| …would target | 2230.75 | 2224.00 |
| Signal status: BIAS-UP | 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… Lingering paralysis.
No real follow-through, or rejection.
Pre-open action during Draghi’s remarks and Q&A was atypically shallow, both up and down. Yesterday’s 2241.25 (basis Dec, 2236.00 basis Mar) high was barely pierced, twice, neither time reversing down. Fresh post-open highs attacked 2244.00, but reacted down 7 points. While failing to trigger the 2240.00 bias-up signal at 10:15, no reversal down has emerged.
And 2240.00 continues attracting price to it even now. A break higher could probe fresh session highs, as “no-bias trending” that would require being retraced. Although some sort of follow-through to yesterday’s rally is likely, this morning’s higher highs would suffice if not reversed before the noon hour. Meanwhile, back under 2236.50 would have room to the 2232.25 bias-down signal without yet requiring any retracement up.
All prices above are basis Dec, which is trading at a 5.25 premium to Mar. We’ll switch to Mar when the morning bias environment has lapsed.