Posts by Rod David
Pre-market Tour (recording & summary)
The ECB statement was greeted at 2239.00 (basis Dec, 2233.75 basis Mar). The immediate reaction to potential future tapering was a 6-point plunge. Its less immediate reaction bounced back up to the plunge’s origin, and through it to pierce the overnight highs by 2 ticks. Price settled back ahead of Draghi’s prepared remarks which retested yesterday’s high, and the Q&A which has held up at the highs.
Regardless of not gaining traction, some intraday follow-through to yesterday’s rally is likely, whether today or tomorrow. Holding a test of either upside objective and reacting down to close back under 2220.00 (basis Dec, 2214.75 basis Mar) would negate the next higher objective. The trend would all but reverse down if either next higher objective (2244.75 or 2252.50 basis Dec, 2239.50 or 2247.25 basis Mar) had been tested already.
The front-month rolls forward at the open from Dec 16 to Mar 17. I’m continuing with Dec this morning as it’s the only contract to have traded in this area as a front-month. This handy-dandy reference table identifies recently relevant levels until this afternoon:
| Item | Dec | Mar |
| bias-up signal | 2240.00 | 2234.75 |
| bias-up target | 2245.50 | 2240.25 |
| bias-down signal | 2232.25 | 2227.00 |
| bias-down target | 2227.00 | 2221.75 |
| next objective | 2244.75 | 2239.50 |
| higher objective | 2252.50 | 2247.25 |
| objective rejection | 2220.00 | 2114.75 |
Details and other markets coverage are discussed in the pre-market Tour recording here.
The First Trade… Paralyzed by anxiousness.
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…
Wednesday’s rally was literally awesome. Its 2210.25 buy signal was likely to reach the 2220.00 objective put into play two weeks prior by closing above 2192.00. It was met coming out of the noon hour, but the rally hardly skipped a beat. The afternoon’s bias-up signal was renewed, and extended even higher to 2241.25. Yet, no traction was gained for the effort, despite the 3:10-3:20 proxy window temporarily probing fresh highs.
Overnight action’s new info…
Never seeming concerned with the next day’s ECB events, Wednesday’s rally left nothing on the table for Globex. Two late afternoon tests of 2240.00 each had reacted down to 2236.00. The second reaction extended only slightly lower into the Globex open to pierce 2235.00. Firming up to 2240.00 has reacted back down to 2235.00. Price is fluctuating around unchanged as this morning’s ECB policy decision nears.
If, then…
Closing above 2220.00 puts into play higher objectives, if the close above 2220.00 can be maintained for a second consecutive session today. The next higher objective at 2244.75 was attacked already so closely, that its room for noise up to 2252.50 would be as likely to be met. Closing back under 2220.00 Thursday would negate the higher objective, and open the door to an almost equally steep reversal down into next week — no matter how deeply price had reversed already Thursday.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2241.25 would be likely to trigger the 2240.00 bias-up signal at 10:15. Exiting the open under 2238.00 would be unlikely to trigger bias-up. Exiting the open under 2231.00 would be likely to trigger the 2232.25 bias-down signal.
Morning Bias
| THU morning signal (triggered at .0010:15 ET) | SPX | ES |
| Bias-up: above | 2241.00 | 2234.75 |
| …would target | 2246.25 | 2240.25 |
| Bias-down: under | 2233.00 | 2227.00 |
| …would target | 2228.00 | 2221.75 |
| Signal status:NO-BIAS, TESTED BIAS-UP SIGNAL | 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)
No traction from the bias environment lapsing above the noon hour high, since the 3:10-3:20 proxy window didn’t trend to fresh highs. Not for lack of proximity, or for lack of trying. Fresh highs were probed up to 2236.50 during the window, but not maintained upon its exit.
None of which prevents extending higher anyway, which the balance of the session did up to 2241.25. Reacting down to 2136.00 was recovered almost entirely into the cash session close, before reacting down as much again into the futures close.
Just as closing above 2192.00 had put into play 2220.00, now closing even higher is targeting 2244.75 or 2252.50. Unless Thursday were to close under 2220.00.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.
Pre-close View… What could go wrong?
What could go wrong:
I joked in my last blog post that this may be the “Anti-antiTrump” rally. But that leg actually peaked before last Wednesday’s high retested it at 2212.00, launching a temporary correction down. The pullback’s lowest objective at 2181.00 was met Sunday night in reaction to Italy’s “no” vote. Opening Monday back above Friday’s lows isolated that probe of fresh lows to the overnight. Today’s test of 2235.00 is the result.
Trump’s rally seems to tower of the No-vote rally. Even if we include the No-vote’s 2179.00 low — without including election night’s 2029.00 low — that’s 56 points since Sunday night’s low, compared to 87 for Trump. The better pace is this week, just 3 days in and already two-thirds as productive as Trump’s 13-day run.
Of course, there’s nothing scientific about the comparison, and not much that is mathematical. Plus, we don’t need a rate-of-change indicator to tell us this week’s rally has been significantly steeper than the prior upleg.
Steeper, into new highs. New highs, into Thursday’s ECB policy meeting, and Mario Draghi’s press conference. His comments have a perfect track record for quite some time of launching steep price swings, often in multiple directions, during the same presser. Be careful.
As for the balance of this afternoon, the final hour just missed an opportunity to gain traction. It was entered within the bias environment’s range, instead of high to confirm the bias environment that had lapsed above the noon hour’s high. Confirmation is still possible by extending higher through the 3:10-3:20 proxy window, which just opened by probing highe.
Back under 2232.75 would target 2222.00. There would be no “unfinished business above” since RSIs have left overbought territory. And closing at or under 2220.00 would prevent putting into play any higher objective. Just as Mario Draghi takes the microphone.