Posts by Rod David
Post-market Wrap (recording & summary)
There’s a report of a Russian comminique advising its diplomats to bring home students from abroad. Did that crystallize a concern that was causing Tuesday’s undercurrent of relentless selling? The market’s reaction suggests as much, already having bounced off its 2121.75 low just before the headline crossed, and then extending higher in reaction. I hope we don’t have to start acheter sur les canons, vendre sur les trompettes.
The afternoon’s bias-down did not officially trigger, although that was a very borderline signal. The late-afternoon bounce retraced it, but didn’t close above it. That’s not a sell signal, but it’s certainly not a rejection of the session’s decline. And there’s no opening action Wednesday that can reject Tuesday’s break — the most bullish scenario must probe lower intraday before recovering. The most bearish setup would try recovering prematurely.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.
Pre-close View… Escaping disaster?
Relentless drop finds a bid.
Extending down to and through the afternoon’s 2125.25 bias-down target to 2121.75 has been recovered back up to 2131.00. That was this afternoon’s bias-down signal, which officially did not trigger, making the probe under it “no-bias trending” that required being recovered.
That was officially, although it was by the grace of a single tick, which had disappeared one minute later. One tick, one minute earlier would have been noN-bias, which often retraces the bias signal, anyway.
Now the position-squaring window is opening at 3:37-3:52. And a bounce just neutralized a possible upside attraction. Left outstanding below is oversold RSIs. Back under 2127.25 could trigger another downleg to fresh session lows. Otherwise, extending the bounce would next target 2136.00.
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 to fresh lows Tuesday suggests that the ongoing distributive pattern is finally maximizing its influence, after weeks of choppy flat-to-lower ranging that hasn’t yet put together two consecutive lower closes under a support.
Gold Dec Contract (GC, ETF: (GLD))
Monday’s unimpressive gap up and ranging was retraced only shallowly Tuesday, barely filling its gap back to Friday’s 1255.70 close. The impatient buying suggests that a deeper dip is needed to form a better bounce.
Silver Dec Contract (SI, ETF: (SLV))
Dipping shallowly Tuesday stopped optimistically short of filling the gap back down to Friday’s 17.41 close. The impatient buying suggests that a deeper dip is needed to form a better bounce.
30-year Treasury Dec Contract (US, ETF: (TLT))
Closing Monday under 165-02 had maintained the downtrend’s momentum, at least preventing a buy signal. Perhaps the plunging stock market created a flight-to-safety that eventually produced a bounce up to 164-22, but the nearest signal at this stage of momentum reversing up would be above 165-18.
Crude Oil Nov Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Overnight highs held the 51.50 target that had been tested Monday morning by a dime, and then already retested Monday afternoon. Breaking under the 50.80 pullback limit Tuesday now requires its immediate recovery Wednesday to maintain potential for extending this leg to 54.60. Two consecutive lower closes under 50.80would instead signal at least a deeper pullback underway.
Natural Gas Nov Contract (NG, ETF: (UNG, UNL))
Probing a Monday’s high overnight up to 2.31 allowed room for a deeper pullback down to 2.14 before reversing momentum down. But holding 2.20 would at least maintain the upward momentum.
Mid-day Update… Troubling.
Nothing bullish about this relentless slide.
At least a reaction to news offers the opportunity to price in the catalyst. Regardless of wide disparities among perception of that value, there’s something to value. And there’s a sentiment that can play out.
A reaction to bad news is different than price simply collapsing. Which is what is happening today.
None of today’s various news is creditable for today’s drop. Not for its relentlessness, trending down through every timing window. Not for its damage, breaking under “lower prior highs,” a gap, and prior lows. And not for its timing, immediately following a probe of prior highs.
Notice the one element I did not mention: Price. Price is relative to range, and is otherwise irrelevant. In fact, today’s drop isn’t that substantial compared to the range that it’s probing. This is even more bearish than not having a scapegoat, since there’s plenty of room to expend more selling pressure.
Currently this afternoon’s 2125.25 bias-down target is being tested. Late no-bias had triggered, by the grace of a single tick and a single minute. A more decisive no-bias would require recovering at least to 2131.00. Still possible, although oversold RSIs at the low would undermine the durability of any more upside than that. If at all.
Look ahead: Economic Calendar – for Wed Oct 12, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Wednesday’s participation is less due to observance of the Yom Kippur holiday. While that can inhibit volatility, it can also magnify any reaction to the morning’s Fed speakers, the JOLTS report, or to the afternoon’s FOMC Minutes release.
MBA Mortgage Applications
7:00 AM ET
*William Dudley Speaks
8:00 AM ET
*Esther George Speaks
9:40 AM ET
*JOLTS
10:00 AM ET
3-Yr Note Auction
1:00 PM ET
10-Yr Note Auction
1:00 PM ET
*FOMC Minutes
2:00 PM ET