Posts by Rod David
Post-market Wrap (recording & summary)
Thursday’s gap up to 2167.50 extended only high enough to test and to hold “higher prior lows” at 2172.50. Its eventual reaction down attacked 2164.00. The cash session close was within 5 ticks of the opening print, which the futures close probed. The session went nowhere, despite the momentum that had greeted its open, and the volatility it produced.
Along the way, the session did put into play a bias-up target at 2175.50. It became “unfinished business above,” and not for lack of trying to reject it. It can be met overnight and its attraction neutralized in time for Friday’s open to trigger a durable decline. Otherwise, triggering a decline at Friday’s open would remain likely to recover.
Gapping up Friday would be the most credible setup to resume the rally without further delay. It could be very productive, since being a Friday, the morning’s bias would tend to extend through the noon hour. But not trending up to fresh highs through Friday’s open would be vulnerable to reversing back down.
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… Refueling buyers, or warning them?
Bias-up dip seems ominous.
This afternoon’s 2169.25 bias-up signal triggered cleanly at 1:20. Despite not yet having extended above its pre-1:20 2172.75 high, the bias-up signal was maintained through 1:30. So, rejecting its 2175.50 target would require exiting the bias environment at 2:30 back under its 2163.50 bias-down signal.
None of which prevented a 6-1/2 point plunge, which extended down to attack 2163.50 to within 3 ticks. That was within minutes of 2:30. And it still held. So, not for lack of trying to reject it, but the 2175.50 bias-up target becomes “unfinished business above.” Its eventual test is required before a durable decline would be credible.
In fact, the plunge has been retraced entirely to retest 2171.00. That’s still not a fresh session high, let alone the 2175.50 bias-up target. But it helps to confirm the plunge’s bias-up context.
The only question is whether the plunge refueled buyers (i.e. trapped shorts in order to squeeze them) to extend the rally, or if the bias-up plunge is warning that the rally is waning. How about a little of each.
Back under 2167.00 can trigger another downdraft, plunge-like or not. But reacting down after testing the 2175.50 bias-up target can produce a durable downleg. Which the bias-up plunge suggests.
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 up Thursday retested the 1.1265 sell signal that had triggered last week by gapping down. Extending higher intraday to 1.1300 filled the gap back preceding the sell signal’s original break, neutralizing its upside attraction. Closing back under 1.1265 is credible as re-triggering the sell signal.
Gold Dec Contract (GC, ETF: (GLD))
Wednesday’s post-close surge in reaction to the FOMC news was not rejected overnight, and firmed slightly into Thursday’s open to test the original 1341.50 sell signal. Closing above it Thursday, and confirmed by a second consecutive higher close Friday, would take 1296.00-1297.00 off the table for a bigger rally leg. Back under 1329.00 would resume the decline.
Silver Dec Contract (SI, ETF: (SLV))
Gapping up above 19.75-19.85 and closing above it would be confirmed as being the beginning of a new upleg by a second consecutive higher close Friday. Otherwise, back under 19.75 would trigger a new downleg.
30-year Treasury Dec Contract (US, ETF: (TLT))
Gapping up and extending higher Thursday to test 168-00 is further confirmation that a bottom has formed, but it doesn’t prevent backing-and-filling that tests the past week’s “lower prior highs” before extending higher.
Crude Oil Nov Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Thursday’s gap up and higher close confirmed Wednesday’s breakout, and the likelihood for this leg to now target 49.00. Closing back under 45.00 could extend lower to fresh lows, but only in the context of being temporary.
Natural Gas Oct Contract (NG, ETF: (UNG, UNL))
Thursday’s EIA report was greeted from a position of strength for not having rejected Tuesday’s breakout, although Wednesday had not confirmed the breakout. The intraday reaction down held “lower prior highs” and remains likely to recover and resume the rally.
Look ahead: Economic Calendar – for Fri Sep 23, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Fed speakers at noon are Patrick Harker, Dennis Lockhart and Loretta Mester, but their topic is supposed to be specific to the Philadelphia community. The afternoon’s Rig Count could be influential .
PMI Manufacturing Index Flash
9:45 AM ET
Atlanta Fed Business Inflation Expectations
10:00 AM ET
Regional Fed presidents panel
12:00 PM ET
*Baker-Hughes Rig Count
1:00 PM ET
Afternoon Bias
| THU afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2176.75 | 2169.25 |
| …would target | 2182.75 | 2175.50 |
| Bias-down: under | 2170.75 | 2163.50 |
| …would target | 2165.50 | 2158.00 |
| 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.