Posts by Rod David
Pre-market Tour (recording & summary)
The overnight surge up to 2205.75 has been corrected almost 8 points down to 2198.00. That barely threatened to touch Friday’s 2197.25 high. Isolating the probe under Friday’s low to the overnight is all the more likely. That does not prevent backing-and-filling into Friday’s range down to 2191.00-2193.00. But it would likely recover and extend above overnight highs so long as a post-open dip doesn’t interfere with triggering the 2195.00 bias-signal. Otherwise, there’s plenty of room below for deeper backing-and-filling.
Details and other markets coverage are discussed in the pre-market Tour recording here.
The First Trade… Bad news bounce.
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…
Friday’s session tracked its likely scenario by rallying in the morning and then dropping into the afternoon. The morning’s 2197.00 bias-up signal neatly defined the window’s upper-end, 
and dipping back under 2192.00 signaled momentum reversing down. But 2187.50 held a couple of tests during the afternoon bias environment while RSIs diverged positively, instead of extending down to the 2181.00 target. The balance of the session retraced to the 2192.00 sell signal. But only retraced it.
Overnight action’s new info…
Sunday’s open was greeted by an important referendum in Italy having lost, presumably placing Italy’s banks in jeopardy. The open gapped down to test and retest 2181.00 down to 2179.00. Its reaction probed Friday’s lows up to 2189.00 and then corrected down to 2182.00. Europe’s opens were greeted by a steep surge already testing 2196.00, and extended to attack 2206.00. Now a dip is testing and retesting 2299.00.
If, then…
I posed this question about Sunday night’s gap down when opening the chaRTroom last night: “Is that the end of what was likely to be only a brief pullback before probing fresh highs?” Up 27 points off the overnight low, still I only suspect the answer is yes. One concern about this recovery is the timing of its origin — already surging into Europe’s opens prevented a sympathetic knee-jerk reaction to mirror the Globex open. It suggests the recovery is premature and sponsored by weak hands. Regardless, the overnight low need not be revisited, but last Wednesday’s 2210.25 open all but requires a retest, and the rally has an even higher unmet objective above at 2220.00. None of which prevents post-open backing-and-filling if the overnight short-squeeze isn’t quickly resumed.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2203.50 would be likely to recover the 2200.75 bias-up target through 10:15 to renew the bias-up signal, next targeting 2207.75. Exiting the open above 2197.50 would be likely at least to trigger bias-up.
Globex gapping down… chaRTroom link, and comments.
Better late than never? An unusual flight delay and computer checked in baggage has delayed me opening this evening’s chaRTroom. But it is worth the wait. Today’s referendum in Italy lost, which has several primary consequences, most immediately the unknown future of Italy’s banks.
Although Friday afternoon’s 2193.00 sell signal held a couple of tests of 2187.50 before retracing into the close, it was only retraced, but not reversed. The drop resumed immediately at Sunday’s opening gap down.The 2181.00 target was quickly tested and retested down to 2179.00.
Is that the end of what was likely to be only a brief pullback before probing fresh highs? A bounce is already testing Friday’s 2187.50 lows as resistance. Another negative reaction is likely at Europe’s opens, perhaps only a similar knee-jerk reaction. I would be suspicious of recovering too much before then, but not afterward. Regardless, tomorrow — and this week, with the next Fed meeting closing in — should be opportunity-rich.
Morning Bias
| MON morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2195.75 | 2195.00 |
| …would target | 2201.50 | 2200.75 |
| Bias-down: under | 2188.25 | 2187.50 |
| …would target | 2182.00 | 2181.25 |
| Signal status: BIAS-UP, EXCEEDED 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.
Daily Spot…
A daily summary of high-profile members of several complexes… PLEASE NOTE: THERE IS NO MARKET WRAP TODAY.
Eurodollar Dec Contract (EC, ETF: (FXE, UUP))
Thursday’s test of the 1.0655 buy signal was probed overnight up to 1.0695, and then again Friday morning to at least test the 1.0685 prior highs. Closing any higher would help to confirm that Wednesday’s retest of the prior Wednesday’s close had sufficed to form a durable bottom.
Gold Feb Contract (GC, ETF: (GLD))
Modest overnight strength stopped short of even attacking the 1181.00 level whose recovery would start to suggest a bottom is forming. Friday’s post-open dip to 1168.50 was recovered to a higher high. Meanwhile, this leg’s minimum 1166.00 objective has held two tests and closed higher, with no overnight lower low, so a bottom has no bullish reason to further delay starting to signal it is forming.
Silver Mar Contract (SI, ETF: (SLV))
Rallying overnight to probe back above 16.70 was retraced already by Friday’s open. But the morning’s higher highs suggested its recovery through the close, which would begin sealing a bottom, if not also reverse momentum up.
30-year Treasury Dec Contract (US, ETF: (TLT))
Gapping up Friday ahead of the Employment Situation report didn’t much change in reaction to the report. So long as 150-25 isn’t recovered, at least one more lower close remains likely.
Crude Oil Jan Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
The 50.50 pullback limit was tested overnight. So long as it holds as support through the close, the next higher target at 52.75 is in-play, and potentially aslo 56.15.
Natural Gas Jan Contract (NG, ETF: (UNG, UNL))
Extending to fresh highs overnight does not prevent reversing down intraday. Indeed, Friday’s opening action did reverse down from testing 3.57 overnight to probe under the 3.48 pullback limit, whose break through the close would trigger a deep pullback. Closing above 3.53 would indicate the pullback limit held its test.