Posts by Rod David
Post-open Review… That’s new, for this week.
Opening surge hangs on.
The open surged through yesterday afternoon’s 2138.75 bounce high on the way to 2142.50. A pullback to 2139.75 held as expected, 
and resolved up to 2144.25.
Although the actual path here was a little different., that’s not a new level, not for this week. Monday and Tuesday both gapped up to this area. Monday exceeded it to attack 2147.00, and Tuesday only attacked 2144.00. Both resolved down sharply.
Resolving differently today is not ensured. But it’s likely. And the more hesitation now to extending higher, the likelier that is ineffectual pessimism, which is potentially bullish from a contrarian perspective.
Impending news like this afternoon’s FOMC events create anxiousness that could trigger selling. And already extending higher does create more room to expend selling pressure without it impacting the upside. Back under 2140.25 could extend back under yesterday afternoon’s high again to 2133.00, and still be likely to recover.
Otherwise, even the most bullish scenario need not resolve up immediately. But ranging flat-to-higher this morning — perhaps up to 2146.00-2147.00 — is likelier than reversing down.
Pre-market Tour (recording & summary)
The reaction down from 2144.00 has extended to 2136.00. Yesterday afternoon’s 2138.75 high — preferably also 2139.75 — should be recovered through the open to maintain this morning’s rally potential. Exiting the open above 2140.50 would be optimal to keeping Monday morning’s 2146.75 high in-play, even if only attacked before everyone starts cowering ahead of the afternoon’s FOMC events. Not exiting the open above yesterday afternoon’s high could be bearish, but probably not much if not immediate.
Details and other markets coverage are discussed in the pre-market Tour recording here.
The First Trade… It’s happening. Again.
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…
Like morning, like afternoon? Tuesday’s gap up had failed two attempts to extend above 2143.00, and instead reversed down into and out of the noon hour to 2131.00. The afternoon’s weak-handed bounce to 2138.75 failed to gain traction above any relevant price at a relevant timing window. So it was retraced entirely back into the close. The morning’s “unfinished business below” at 2128.25 was attacked to within 3 ticks coming out of the close, which was enough to neutralize its attraction.
Overnight action’s new info…
Price was still hovering at Tuesday’s lows into the BOJ announcement, which triggered a spike down to 2126.25. It recovered as quickly, and the recovery extended substantially. Probing yesterday’s highs by 2 ticks up to 2144.00 finally reacted back down to test yesterday afternoon’s 2138.75 bounce high as support by almost 1 point..
If, then…
The overnight spike down not only tested yesterday morning’s unfinished business, which had been neutralized already, but also oversold RSIs at Monday’s low. Now indicated to gap up around 23142.00 for a third consecutive session, overbought RSIs at Monday morning’s 2146.75 high are likely to be tested. And it’s unlikely to offer durable resistance on the way up to last Monday’s highs around 2151.00. But it would have to done quickly this morning, and aggressively, before price action can become paralyzed by anxiousness ahead of the afternoon’s FOMC policy statement AND Yellen’s quarterly Q&A. Perhaps obligatory resistance around 2146.75 separates the recovery into stages, and still leaves enough time to react down from testing the prior highs.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2139.75 would be likely to trigger the 2136.00 bias-up signal at 10:15. Exiting the open above 2143.00 would be likely also to exceed the 2141.50 bias-up target at 10:15 to renew the bias-up signal.
Morning Bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2143.50 | 2136.00 |
| …would target | 2148.75 | 2141.50 |
| Bias-down: under | 2135.50 | 2128.25 |
| …would target | 2128.75 | 2121.25 |
| Signal status: BIAS-UP, BIAS-UP TARGET EXCEEDED | 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)
Tuesday afternoon’s weak-handed bounce from 2131.00 up to 2138.75 had stretched the rubber band without gaining traction for the effort. Attracting strong-handed buyers above a relevant price level was unlikely, since relevant price levels weren’t being probed during relevant timing windows. The consequence wasn’t just to stop rallying, or even just to reverse down, but to collapse to fresh session lows.
Price did collapse, albeit not immediately under the 2135.75 inflection point. And not to fresh session lows, only back to the afternoon’s 2131.00 low. Actually, fresh lows were probed immediately following the close, to within 3 ticks of unfinished business below at 2128.25. Which neutralizes it, and no longer requires its test.
So, keep that in mind while reviewing the Wrap recording. I’ll be monitoring the overnight reaction to any BOJ statement. And we’ll be looking forward to Wednesday afternoon — not only a Fed statement, but also a quarterly Q&A by Yellen which is reliably volatile.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.