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 Dec Contract (EC, ETF: (FXE, UUP))
Quickly probing fresh lows Wednesday morning was ultimately maintained to fulfill the unfinished business below. Additionally, the 1.0540 target was tested and held. This isn’t necessarily a bottom, and a second consecutive lower close would confirm the decline’s momentum remains intact. But it’s an opportunity for a low, and we’ll now monitor for a reversal setup to develop.
Gold Dec Contract (GC, ETF: (GLD))
Wednesday’s plunge sliced through the outstanding 1196.50 target down to 1181.20.Regardless of the sizeable one-day break, having originated from a multi-session range makes it a breakout, which a second consecutive lower close would confirm. Meanwhile, bounces should hold 1194.00 as resistance to maintain the decline’s momentum. Closing above 1201.00 would start to signal momentum reversing up.
Silver Dec Contract (SI, ETF: (SLV))
Sharply lower lows Wednesday morning down to 16.15 provided the selling attempt still needed to prove whether a bottom has been forming. But closing back above 16.62 is still needed to even begin suggesting a bottom is forming — preferably without a second consecutive lower close.
30-year Treasury Dec Contract (US, ETF: (TLT))
Spiking down to fresh lows at 151-19 on Wednesday’s pre-open Durable Goods report didn’t prove decisively whether the recent ranging is now resolving down. Bouncing probed back into the range to test 153-00, so the next session’s resolution in either direction would become vulnerable to extending in that direction again.
Crude Oil Jan Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Tuesday’s last-minute surge up to 48.55 was rejected by gapping down Wednesday to test 47.45, but the gap was filled in reaction to the morning’s EIA report. None of which is necessarily bearish, so probing fresh recovery highs is likely.
Natural Gas Dec Contract (NG, ETF: (UNG, UNL))
Firming again Wednesday probed more decisively above the prior two sessions for a better chance at fulfilling the rally’s outstanding requirement for a third higher close. Closing above 3.08 would signal a bigger rally underway, but there otherwise remains attractions to 2-3 gaps below.
Mid-day Update… Good news is bad.
Rate hike clues about to be released.
We’ve been discussing for almost two months how the market has adapted to the potential for a rate hike. Knee-jerk reactions not withstanding, price action following good and bad econ reports has suggested getting it behind us would be bullish. Of course the actual FOMC decision would trigger a dip. But the ultimate resolution would likelier be a strong rally as that bad news becomes history.
So, this afternoon’s FOMC Minutes might trigger a knee-jerk reaction down if they reflect a willingness to raise rates. But that’s largely anticipated, so a dip would likely be temporary.
A deeper drop could follow Minutes that suggest less hawkishness. And similar to a rate hike’s knee-jerk reaction up, dovish language in the Minutes would likely first trigger a knee-jerk reaction up.
Some higher high remains likely at some point to satisfy this morning’s 2204.25 objective. Exiting the bias environment under 2104.00 would delay that upside objective for another day.
Don’t forget that after the FOMC Minutes reactions, the only influence is volume quickly evaporating ahead of the holiday. Try to avoid getting caught in an illiquid market, or expecting sponsorship to break beyond a range.
Look ahead: Economic Calendar – for Thu Nov 24, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Happy Thanksgiving! US markets are closed for the holiday, but Globex is still open.
1:00 PM ET Globex trading halt
6:00 PM ET Globex re-opens normally
Afternoon Bias
| WED afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2203.50 | 2201.25 |
| …would target | 2207.75 | 2205.50 |
| Bias-down: under | 2196.25 | 2194.00 |
| …would target | 2192.00 | 2189.75 |
| Signal status: NO-BIAS | 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… Waiting hours for Minutes.
Fresh post-open lows recover to narrowly avoid bias-down.
The pre-open slide ultimately extended to greet the open at 2193.25. Bouncing up to 2197.00 was resolved down to 2192.00. That was yesterday morning’s low, itself holding a test of Monday afternoon’s lows.
That was the opening 15 minutes of volatility — down 8 points from the close and testing support. Any lower would have fallen over the edge, perhaps less in terms of price than in marginalizing buyers for the balance of the morning.
But bouncing high enough for long enough invoked the grace period, and the 2195.25 bias-down signal avoided triggering. Exiting the grace period above the pre-10:15 2197.00 high was helpful confirmation. Crude Oil’s reaction to its EIA report also helped extend up to 2199.25.
An offsetting test of the 2204.25 bias-up signal is in-play. The signal has already been productive. So, 2204.25 will become “unfinished business above” if left outstanding. Having at least attacked support, flat-to-higher ranging is likely for the next three hours while awaiting the FOMC Minutes.