Posts by Rod David
Mid-day Update… Second bite?
Back up to unchanged.
Despite ultimately touching 2126.75, a bounce or a recovery was required. Breaking under the 2133.00 bias-down signal at 10:30 was still overlapping 2133.00, which required returning to it at some point — regardless of the resolution. The bias environment started lapsing back at 2133.00.
Surging into the noon hour has extended to within 1 point of the plunge’s 2141.25 origin. And now the afternoon’s 2136.50 bias-up signal has triggered. Back above 2139.00 would signal the rally had resumed.
Meanwhile, the market is still only unchanged at best, and otherwise in negative territory. Two big recoveries from lower and lower probes under yesterday’s low is potentially bullish. That potential is stored energy and otherwise useless if not triggered. Entering positive territory should be that trigger. Meanwhile, there’s room for a little deeper “backing and filling.”
Look ahead: Economic Calendar – for Fri Oct 21, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: No econ reports compete with Friday’s pre-open earnings and expiration. Two Fed speakers each claim a morning and afternoon slot, which might help to keep the afternoon from stagnating.
*Daniel Tarullo Speaks
10:15 AM ET
Baker-Hughes Rig Count
1:00 PM ET
*John Williams Speaks
2:30 PM ET
Afternoon Bias
| THU afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2142.50 | 2136.50 |
| …would target | 2147.50 | 2141.50 |
| Bias-down: under | 2133.75 | 2127.75 |
| …would target | 2128.00 | 2122.00 |
| Signal status: BIAS-UP | 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… Don’t blink.
ECB reaction retraced entirely. Briefly.
Mario Draghi never disappoints. His press conferences somehow always have a little something for every opinion, regardless of how polarized. But the retest of yesterday’s 2132.25 low that he triggered had not recovered enough to greet the open bullishly. 
Its retest was likely, and likely to probe lower. And also likely to recover.
The open’s bounce attacked 2137.50 and reversed down to fresh lows at 2131.00. RSIs diverged positively on its retest, producing a bounce back to 2137.50, and eventually higher to where the ECB news had been greeted at 2141.25.
Coming to within 3 ticks of this morning’s 2141.50 bias-up signal neutralized it from becoming “unfinished business above” if left outstanding, after being put into play by earlier holding the test of this morning’s 2133.00 bias-down signal.
Neutralized it, indeed. Its reaction plunged to new lows at 2127.50. Volatility hasn’t suffered much without Mario.
After violating its 2140.25 pullback limit, a pullback was likely to test 2138.00 and only have potential to 2136.50. With no requirement for the latter, I only sold later. The math still works, because a break lower could be a product of the post-open 2131.00-2141.25 bounce. That’s a big measurement for the potential reward to what would still be a relatively low risk parameter.
Regardless of the 2133.00 bias-down signal being probed at 10:30, it was also being overlapped. It was not broken in time to invalidate the no-bias environment, regardless of its objective already above neutralized. Whether or not the plunge intends to extend, 2133.00 should be retested at some point. Its recovery could extend, or resume the decline.
Pre-market Tour (recording & summary)
So much for gapping up. Reaction to the ECB events (i.e. Draghi’s presser) triggered a slide from 2140.50 to 2132.25). That is a test of yesterday morning’s low, which must hold through the open to avoid shifting momentum down. Even then, holding it wouldn’t preclude probing it intraday, although its recovery would be likelier. Regardless, the nearest and most recent “unfinished business” is above at 2145.50 — above yesterday’s high and the overnight high. Back into positive territory through a relevant timing window would all but put into play fresh highs.
Details and other markets coverage are discussed in the pre-market Tour recording here.