Posts by Rod David
The First Trade… Lying in wait.
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…
Recovering from sharply lower overnight lows didn’t held Thursday morning trigger bias-up, despite testing the bias-up signal. And only ranging choppily throughout the morning didn’t prevent the afternoon from triggering bias-down. The overnight attack on the decline’s 2082.00 target to within a couple of points had made it likely to be probed if ever revisited, and Thursday afternoon probed it by a couple of points. A very late bounce to a couple of points back above 2082.00 was enough to avoid “hold-short” although oversold RSIs accompanied the low.
Overnight action’s new info…
Thursday’s late bounce initially firmed, and eventually attacked 2087.00. The impending Employment Situation may be responsible (finally) for inhibiting trending. Hovering into Europe’s opens has since dipped back down to within 3 ticks of yesterday’s 2079.75 low.
If, then…
If Friday’s Employment Situation was influential Thursday, then it caused pessimism. That can be bullish from a contrarian perspective, by discounting an unfavorable reaction and stealing sellers’ thunder. That wouldn’t preclude there being an initially negative knee-jerk reaction, especially if the room for noise under 2082.00 down to 2077.50 hasn’t yet been touched. The target meanwhile remains in-play. Regardless, the weekend’s impending illiqiudity can cut either way. Maintaining a gap up above Thursday afternoon’s last relative high at 2088.00 could set a very bullish tone for the day. But the current trend is not a recovery’s friend. It’s difficult to reverse eight consecutive days of probing each prior session’s low without another fresh intraday low.
First Trade…
[Click here to view the Bias parameters] No preliminary indications are considered before an Employment Situation report.
PROGRAMMING NOTE #1: There is no Saturday Review this weekend, so we’ll review the bigger picture during this afternoon’s Market Wrap… PROGRAMMING NOTE #2: Market Wrap will be done during the session’s last half-hour, specific timing TBA.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2094.50 | 2088.75 |
| …would target | 2101.00 | 2095.50 |
| Bias-down: under | 2087.50 | 2082.00 |
| …would target | 2082.50 | 2076.75 |
| Signal status: NO-BIAS, TESTED BIAS-DOWN 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)
Anxiousness ahead of Friday’s Employment Situation report didn’t paralyze price action. At least, not everyone’s — only buyers. Thursday morning failed to trigger bias-up and the afternoon triggered bias-down. Interestingly, the 2082.00 bias-down target was met, and the room for noise under it down to 2077.50 was attacked to within almost 2 points. Its reaction up to only 2084.50 suggests the target remains in-play. And if tested in reaction to payrolls, the market will have a big decision to make on whether to enter the weekend. Either ride the roller coaster back up in a short-squeeze, or hang on for dear life.
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))
Gapping down Thursday back under Tuesday’s highs could have formed an Island of Wednesday’s probe above the 1.1100 target. But Thursday’s post-open bounce filled the gap back up to Wednesday’s close and probed back into Wednesday’s range. There is now no “unfinished business above” to ensure a recovery if a decline were to begin.
Gold Dec Contract (GC, ETF: (GLD))
Tumbling overnight exploited almost all the room below for a pullback attacking 1283.50-1286.00. Thursday’s gap down had already begun recovering, and the morning;s bounce extended back above 1300.00. An eventual third higher close is in-play.
Silver Dec Contract (SI, ETF: (SLV))
Dropping sharply overnight to test its 18.05 pullback limit was reversed back up Thursday. An eventual third higher close is in-play.
30-year Treasury Dec Contract (US, ETF: (TLT))
Bouncing to and through the 163-02 bounce limit over two days has led to the third day gapping back down under 163-02. While the bottoming attempt around 161-22 is probably not complete, Friday’s Employment Situation report isn’t necessarily being greeted from a position of weakness — reacting down to fresh lows and then closing higher would seal a bottom, especially if the fresh lows had visited 160-10.
Crude Oil Dec Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Reacting up to 45.70 resistance Thursday was reversed back down to fresh lows under 45.00. The decline’s ultimate 43.75 objective would be lowered if met by the current uncorrected downleg.
Natural Gas Dec Contract (NG, ETF: (UNG, UNL))
Thursday’s EIA report was not greeted from a position of strength. But its reaction was muted, and not necessarily any more bearish than already being at fresh lows. Closing back above 2.88 would be the earliest signal of a bottom forming.
Mid-day Update… Digging deeper.
Noon hour lows not recovering.
This morning’s noN-bias environment only ranged choppily, which is normal. But when the environment came within view of lapsing, the ranging persisted. And when the environment began lapsing, the range persisted. Extending the overnight recovery was becoming less and less likely.
In fact, a break lower into the noon hour fell 7 points to test the setup’s 1286.25 target. Isolating the probe to the noon hour could have been as bullish as the overnight dip’s isolation could have been. But neither seems to be. This afternoon’s 1289.75 bias-down signal triggered, and an attempt to invalidate it just failed.
Trending aggressively would be unusual ahead of tomorrow morning’s Employment Situation report. So, while a recovery today may not be likely, a bottom today is still possible. But bottoming at all isn’t required, as that needed at least to greet Payrolls already in rally mode.