Posts by Rod David
Mid-day Update… Getting used to it.
Buyers less patient.
Yesterday’s post-open dip was deep and recovered entirely. Almost entirely. And then a deeper dip developed overnight.
Recovering that deeper dip into the open didn’t prevent another post-open dip. But it was much shallower than yesterday. And it was recovered entirely. Quickly. And well beyond its origin.
Also, rather than stop pessimistically short of prior highs like yesterday, today’s recovery has extended several points above yesterday’s highs. It’s still a little too shallow to view from a contrarian perspective. But excessive optimism isn’t the only risk, and RSIs are not getting overbought anymore.
This is a late bias-up environment triggered above 2140.50, and it has already produced fresh highs at 2142.25. Reversing down prematurely wouldn’t be unusual, only unlikely. But there’s room down to 2139.00 before suggesting momentum is reversing down.
Look ahead: Economic Calendar – for Thu Oct 20, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Neither of the two leading candidates can affect the economy this year, but Wednesday night’s Globex action might be influenced by the night’s debate between them. Thursday’s pre-open ECB policy statement is more relevant, and more so the subsequent press conference held by Mario Draghi who often triggers volatility. Any reaction to the pre-open Philly Fed survey is likely to be duplicated by post-open reports.
“Presidential” Debate
WED 9:00 PM ET
*ECB Policy Announcement
7:30 AM ET
Jobless Claims
8:30 AM ET
*Philadelphia Fed Business Outlook Survey
8:30 AM ET
*William Dudley Speaks
8:30 and 9:00 AM ET
Bloomberg Consumer Comfort Index
9:45 AM ET
Existing Home Sales
10:00 AM ET
*Leading Indicators
10:00 AM ET
EIA Natural Gas Report
10:30 AM ET
30-Yr TIPS Auction
1:00 PM ET
Fed Balance Sheet
4:30 PM ET
Money Supply
4:30 PM ET
Afternoon Bias
| WED afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2146.50 | 2140.50 |
| …would target | 2151.50 | 2145.50 |
| Bias-down: under | 2141.50 | 2135.50 |
| …would target | 2136.50 | 2130.50 |
| Signal status: LATE 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… Effective ineffectual pessimism.
Snuck in another dip before finally resolving up.
A credible post-open downleg would begin immediately. That was its only requirement. Starting quickly was worth already damaging the chart to signal its strength.
So, gapping open in positive territory, and then blipping-up momentarily to 2137.25, disqualified the slow drift back down to 2133.00 from being credible.
It would have to be more productive and damaging first. Meanwhile, its sponsorship was assumed to be weak-handed.
Two problems, minor, but problems.
First, the slow drift back down to 2133.00 probed it by 3 ticks. Never any deeper than its first 3 minutes, a problem that could be overcome easily. Which it was, by bouncing back above 2134.50 and extending higher.
The second problem was no-bias had triggered, AFTER testing the 2136.50 bias-up signal. That had put into play an offsetting test of the 2130.50 bias-down signal. And the bounce back above 2134.50 didn’t extend quickly enough to invoke the grace period.
That required a rare invalidation, by recovering the 2136.50 bias-up signal through 10:30. Not still overlapping it then, but exceeding it at 10:30 as cleanly as it had failed to trigger at 10:15. Which happened.
Problem(s) solved.
This morning’s 2141.50 bias-up target didn’t require a test, but it has been attacked to within 1 tick. That was also the likely consequence to yesterday’s mid-day “ineffectual pessimism,” regardless of its deeper drop. Maintaining the upside momentum would next target 2145.50 and 2150.00. At least one of which is likelier than launching new downleg, since overbought RSIs at 2141.25 require a retest.
Pre-market Tour (recording & summary)
From rags to riches? The overnight rally to 2135.50 had reversed down aggressively, plunging several points under yesterday’s lows down to 2126.50. All of which has been recovered, and then some, up to 2136.75. Greeting the open back in positive territory is already bullish, bullish enough that not reversing down immediately post-open could marginalize sellers for the day. But also extending immediately through yesterday afternoon’s 2138.00 high could form a “session-long rally” setup. If these elements can’t produce a rally, then a much bigger downleg would become likely.
Details and other markets coverage are discussed in the pre-market Tour recording here.