Posts by Rod David
The First Trade… Not just sound and fury.
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…
Rallying 18 points overnight into Tuesday’s gap up didn’t prevent the open’s 10-point drop to 2129.00. But it did help to absorb it, and almost all of it was recovered back to 2138.50 by noon. The noon hour and afternoon’s no-bias environment hovered narrowly between 2135.00-2137.50 just under the pre-open and post-open highs. The final hour finally started trending — down — meeting its 2130.50 target into the futures close.
Overnight action’s new info…
Initially rallying overnight to 2135.50 held up through midnight. It was all retraced into Europe’s opens, on the way to probing under Tuesday’s lows down to 2126.50. But not for long. A bounce quickly recovered back into Tuesday’s range, briefly probing into positive territory above 2133.00.
If, then…
Enough time was spent Tuesday hovering pessimistically short of retesting prior highs for it to be considered pessimism. That context, and the late drop’s timing, suggest sellers were weak-handed. All of which would be irrelevant if Wednesday’s open were to maintain an immediate break under Tuesday’s low. Having threatened that overnight, recovering to gap up Wednesday would be that much more bullish — gapping up above Tuesday afternoon’s 2138.00 high would form a “session-long rally” setup. Breaking under Tuesday morning’s 2129.00 low to resume the overnight decline would essentially resume last week’s declines, too.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2128.50 would be likely to trigger the 2130.50 bias-down signal at 10:15. Exiting the open above 2133.25 would be unlikely to trigger bias-down. Exiting the open above 2137.50 would be likely to trigger the 2136.50 bias-up signal at 10:15.
Morning Bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2142.75 | 2136.50 |
| …would target | 2147.50 | 2141.50 |
| Bias-down: under | 2136.50 | 2130.50 |
| …would target | 2131.50 | 2125.25 |
| Signal status: NO-BIAS INVALIDATED, TESTED BIAS-UP 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)
Recovering almost all of Tuesday’s post-open drop by noon was no small feat. Ten points down to 2129.00 in an hour, and almost 10 points up in 90 minutes back to 2138.50 — after rallying 18 points overnight — take a rest. Which the noon hour and afternoon’s no-bias environment did, and it was a well-deserved rest, ranging narrowly between 2135.00-2137.50.
The narrow ranging persisted halfway through the last 60-90 minutes, which was less deserved. The two prior timing windows hovered pessimistically short of simply touching the morning’s high, let alone probing it or the 2139.75 pre-open high. So, eventually breaking lower came too late to be sponsored by strong hands.
And the late break lower triggered a sell signal under 2135.00 that fulfilled its 2130.50 target. Weak-handed sellers, fulfilling their selling pressure. Gapping up Wednesday would be the appropriate start to resuming the rally. And after trending down into the close, gapping up above Tuesday afternoon’s 2138.00 high would form a “session-long rally” setup.
Not exploiting any of these otherwise bullish inputs would be as bearish as the pattern could have been bullish. Breaking under Tuesday morning’s 2129.00 low would essentially resume the decline.
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))
Sunday night’s probe of fresh lows testing its next objective had been isolated to the overnight, recovering enough in time for Monday to be only an “inside day” within Friday’s range. Sunday night’s low would still need to be retested, likely to close lower since the isolation attempt had failed. Tuesday’s open did dip back under prior intraday lows.
Gold Dec Contract (GC, ETF: (GLD))
Overnight strength attacked the 1266.00 buy signal that would negate the likelihood for attacking prior lows or probing them down to 1236.00.
Silver Dec Contract (SI, ETF: (SLV))
Gapping up Tuesday stopped short of touching the 17.80 buy signal that must be recovered to suggest the basing has ended.
30-year Treasury Dec Contract (US, ETF: (TLT))
Monday’s bounce held the 164-08 buy signal that would trigger a corrective bounce up to 166-19. Tuesday’s open retested it.
Crude Oil Nov Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
More flat to higher ranging Tuesday remained within proximity to retest the 51.50 target, which remains likely to send price back down for at least a deeper correction. Closing above 51.50 would put into play 54.60.
Natural Gas Nov Contract (NG, ETF: (UNG, UNL))
Having failed to hold 3.26 during Monday’s pullback, resuming the rally required recovering above 3.29. Probing it Tuesday morning by 2 cents still settled back down to 3.26, keeping the door open to another attempt.
Mid-day Update… Another leg?
Volatile session now catching its breath.
18 points were gained from yesterday’s cash session close to the overnight high. More than half of it was retraced by the open’s drop to 
yesterday morning’s “lower prior highs” at 2129.00. And almost all of that drop has been recovered.
Rallying back to 2138.50 at noon hovered, and dipped, while still trading just a two points lower two hour later. Stopping short of the 2139.00 high is pessimism. Not yet reversing down is “ineffectual pessimism.” And pessimism is potentially bullish from a contrarian perspective.
The afternoon’s no-bias environment triggered without even touching either signal. Sponsorship is not involved. Narrow and/or directionless ranging is appropriate for this signal. Soon the no-bias environment will begin lapsing.
Back above 2137.50 would target slightly higher highs around 2141.50. There is potential to extend even higher, but also vulnerability to reversing down sharply. Just dropping back under 2135.00 would suggest a drop is developing anyway.