Posts by Rod David
The First Trade… Buyers backing off.
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…
Even just threatening to attack 2192.00 was likely also to visit 2187.50, which was the decline’s minimum downside target. Thursday’s open at Wednesday’s late 2202.00 resistance did reverse down to probe fresh lows, extending through the session until touching 2187.50. A fresh low was probed briefly down to 2186.00. The late dip was isolated to the final hour, again suggesting the decline is by weak-handed sponsorship. A last-minute bounce targeting 2192.25 was met and held.
Overnight action’s new info…
Fulfilling last-minute buying pressure had required the bounce to extend immediately, if at all. And it didn’t. Slowly trending back down to 2187.50 became steeper at Europe’s opens, dropping to fresh lows at 2184.25. Now a bounce is testing 2187.50 as resistance.
If, then…
Extending down any deeper after the open would likely also visit “lower prior highs” at 2181.00. Probing lower overnight doesn’t yet mandate this lower objective. But probing lower overnight does open the door to a recovery setup other than gapping up. And that would be accomplished by isolating a post-open test of the 2184.25 overnight low, already rallying back above prior lows coming out of the open. Otherwise, holding 2181.00 or breaking under it will be vulnerable to Friday Factors that are influenced by the weekend’s impending illiquidity.
First Trade…
[Click here to view the Bias parameters] No preliminary levels are considered before an Employment Situation report.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2197.75 | 2197.00 |
| …would target | 2203.75 | 2203.00 |
| Bias-down: under | 2188.25 | 2187.50 |
| …would target | 2181.75 | 2181.00 |
| Signal status: NO-BIAS | 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)
Meeting the 2187.50 target put an end to the day’s decline. The afternoon bias environment only ranged sideways back up to 2192.00. A probe of fresh lows down to 2186.00 was isolated to the final hour. That’s similar to Wednesday’s proxy window dip, and to Thursday morning’s bias environment probe. None of which reverses momentum up, but does suggest the decline’s sponsorship is weak-handed and temporary.
Extending down any deeper would next target “lower prior highs” at 2181.00. There is no pre-qualified setup for reversing momentum up Friday, but any recovery should begin by gapping up. And not by a little.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.
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 Dec Contract (EC, ETF: (FXE, UUP))
Filling the gap back down to last Wednesday’s 1.0560 close Wednesday may have sufficed to start forming a bottom, as was suspected. Gapping up Thursday morning was not an appropriate start to launching a recovery, but a post-open dip filled the gap back to this Wednesday’s close and recovered to test the 1.0655 buy signal.
Gold Feb Contract (GC, ETF: (GLD))
Wednesday’s break under 1181.00 had put into play 1166.00, which was tested overnight and then again intraday Thursday down to a lower low at 1162.20. Closing above 1166.00 doesn’t reverse momentum up, but it does allow a bottom to begin forming.
Silver Mar Contract (SI, ETF: (SLV))
Fresh lows for the week under 16.45, both overnight and intraday Thursday, were recovered back above 16.45 to suggest that no new downleg is forming. But one remains vulnerable, unless 16.70 is recovered.
30-year Treasury Dec Contract (US, ETF: (TLT))
Rolling coverage forward from Dec to Mar at a 1-12 discount … Wednesday’s gap down and probe under the prior low was followed by Thursday’s steep drop under the 150-25 sell signal (basis Mar, 152-07 basis Dec) to 148-11. The sequence qualifies as a confirmed breakout, next targeting 147-21, so long as bounces now hold 149-30.
Crude Oil Jan Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
The rally’s minimum 50.50 objective was met overnight, and then exceeded Thursday by gapping up and extending to 51.80. Being a second consecutive higher close, at least an eventual third higher close is now required. Its minimum likely target is 52.75, and potentially also 56.15.
Natural Gas Jan Contract (NG, ETF: (UNG, UNL))
Gapping up Thursday didn’t affect whether the morning’s EIA report was being greeted from a position of strength. Extending higher fulfilled this leg’s 3.45-3.50 target up to 3.52. The target area held as resistance through the close, so almost any negative close on Friday would trigger a multi-session pullback.
Mid-day Update… Target met. Another one coming?
Test of last week’s lows could end here, but need not.
This morning’s 2192.00 bias-down target was met to within 3 ticks, which excluded it from becoming “unfinished business below.” But no bounce ever gained traction to reverse momentum back up. 
And, anyway, retesting 2192.00 was always likely to also visit 2187.50 before any meaningful bounce.
So, trending down throughout the noon hour has extended to touch 2187.50. That’s also this afternoon’s bias-down target, and it held through 1:20, so the bias-down signal was not renewed. This is still a bias-down environment, and extending down anyway would next target “lower prior highs” at 2181.00.
Still, the only bullish scenario from here would recover this afternoon’s 2193.00 bias-down signal when the bias environment starts lapsing at 2:30. Recovering 2194.75 during the bias environment would get a benefit of the doubt for already reversing momentum up, albeit not in an optimal way.
A terrifying characteristic was finally included, which this pattern’s template suggested should be part of the drop before it can end. And nothing has made this dip any less likely to recover. Recall that yesterday’s late drop extended down only after the position-squaring window had isolated a fresh low under 2199.75. Now this morning’s bias environment has also isolated its probe under the open’s 2194.50 low.
None of which prevents dips to lower lows. But their origins suggest that this stage of the dips is not strong-handed enough to prevent retesting yesterday’s highs. And probably also probe higher to fulfill the 2220.00 objective created by last week’s recovery above 2192.00.