Posts by Rod David
Pre-close View… And there it is.
FOMC reaction recovers back to prior highs.
The FOMC elected not to raise rates. Shocker. The intraday corrective drop from the open’s anchor had cleared out selling pressure.
The news was greeted at 2136.00. A blip down held 2133.00 and reversed up as sharply to 2142.00. That extended up to 2146.25 before finally correcting ahead of Yellen’s press conference. She can still threaten, even though the Fed can’t actually bite. So price corrected back down to 2135.25.
Another upleg began with the conference’s start. Having stopped pessimistically short of neutralizing Monday’s overbought RSIs at 2146.75, the area offered little resistance on its retest. Its retest was rewarded by extending higher to last Monday’s highs, which are now being tested up to 2152.25.
Is that it? Possibly. Last Monday’s higher prior lows, the gap back to its close, a 61.8% retracement of the structure containing it… all have been tested at 2152.25. Until actually exceeding the room for noise above it at 2153.00, the market is vulnerable to reversing down. Sharply.
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))
Fresh lows overnight down to 1.1165 on the BOJ news were stabilized Wednesday morning. A spike up in reaction to FOMC attacked Monday’s 1.1240 high. Not closing any higher would keep alive the decline’s momentum, which otherwise has yet to produce two consecutive lower closes.
Gold Dec Contract (GC, ETF: (GLD))
Surging higher overnight tested the 1329.00-1332.00 bounce limit Wednesday morning. Holding it through Wednesday’s close didn’t prevent attacking the original 1341.50 sell signal in reaction to FOMC news. Back under 1329.00 would resume the decline, but closing above 1341.50 would suggest a much bigger rally is underway.
Silver Dec Contract (SI, ETF: (SLV))
Reacting down Tuesday from Monday’s test of the 19.35 bounce limit didn’t prevent extending sharply higher overnight to test the original 19.75 sell signal as resistance Wednesday. It was probed after the close in reaction to FOMC news, and must be recovered through Thursday’s open to maintain this bounce as being only a temporary correction.
30-year Treasury Dec Contract (US, ETF: (TLT))
Spiking down overnight in reaction to the BOJ news probed last week’s lows momentarily, recovering to greet Wednesday’s open probing back above the 165-30 bounce limit. Another, albeit shallower bobble reacted to the afternoon FOMC news before bouncing back up to 165-30. The pattern is well-positioned to rally, so any further delay would be considered bearish.
Crude Oil Nov Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Firming Wednesday morning and reacting up on the EIA report tested the 45.00 buy signal whose recovery through the close would signal momentum reversing up. Probing it up to 45.50 allows a second consecutive higher close Thursday to confirm a rally leg targeting 49.00 is underway.
Natural Gas Oct Contract (NG, ETF: (UNG, UNL))
Instead of backing-and-filling down to lower prior highs, Wednesday’s open gapped up above the longstanding 3.04 target that had been met Tuesday, attacking 3.10 But the initial strength didn’t extend, and the balance of the session only fluctuated around 3.04.
Mid-day Update… Pessimism rules.
Bias-down avoided ahead of FOMC events, but not selling.
This open’s recovery to the 2144.00 overnight high did not extend higher. The 2139.25 open gave way just minutes before coming within view of the bias environment lapsing. No until the noon hour had been entered did its break accelerate, sliding to 2131.50 at the noon hour’s low.
Exiting the noon hour bounced to 2137.50. Another reaction down held comfortably above the 2133.00 bias-down signal to avoid triggering it. This is a no-bias environment.
While opening strength didn’t trend higher, it did hold up high enough and for long enough to create an anchor. The anchor creates context for assuming any subsequent selling pressure is weak-handed, temporary. That selling pressure had room down to 2133.00, which the noon hour held as support. Now a lot of selling pressure has been expended without gaining traction for the effort, and never probing negative territory.
The most bullish scenario would greet FOMC from above 2140.50, but that seems unlikely now. Even that wouldn’t necessarily prevent an initially negative knee-jerk reaction down, but the reaction would likely recover. Regardless, not quickly recovering a reaction down would leave upside attractions behind.
Look ahead: Economic Calendar – for Thu Sep 22, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Thursday is the Autumnal Equinox, which makes it Gann Day — prone to reversals, according to him. This week has reversed down every year this decade. How appropriate that Draghi is scheduled to speak, while Japan’s market is closed. Meanwhile, it’s a busy day for reports, and reaction to pre-open reports is likely to be duplicated post-open.
Jobless Claims
8:30 AM ET
Chicago Fed National Activity Index
8:30 AM ET
FHFA House Price Index
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
10-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 | 2150.00 | 2142.00 |
| …would target | 2154.75 | 2147.00 |
| Bias-down: under | 2140.75 | 2133.00 |
| …would target | 2135.75 | 2127.75 |
| Signal status: NO-BIAS, TESTED BIAS-DOWN SIGNAL | 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.