Posts by Rod David
Market Wrap (recording & summary)
CORRECTION: My early departure on Friday has been delayed by one week. This week will finish out normally.
Wednesday’s rally began somewhat impatiently, probing overnight above 2648.00 before the 1-2 hour false break window. The 2653.00 open wasted no time fulfilling the bias-up target, which was 2653.00. And its post-open pullback to 2647.00 recovered into a 20-point rally into the noon hour.
The only signs of patience was in the FOMC’s policy statement. By then, defensive posturing had pulled back to 2655.00, and correcting the morning’s excessive optimism created room for more. The news reaction surged 29 points to 2684.00, and the Fed Chair’s Q&A extended that to attack 2690.00.
The final hour dipped to 2674.25, and ranged narrowly into the close. Perhaps inhibited ahead of MSFT and FB post-close earnings. Reacting favorably to their beats similar to AAPL enabled futures to firm up to 2683.00, also inspired by NQs surging.
Closing above 2666.00 from under 2656.00. puts into play 2701.00 (subject to a second consecutive higher confirming close Thursday, which could already fulfill 2701.00). Or, not. Having closed above 2666.00, gapping down under 2656.00 Thursday would reject Wednesday’s upside momentum. The 1-1/2 week-long Ascending Triangle only probed higher, but ended the day only overlapping its prior high — vulnerable to reversing down.
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 Mar Contract (EC, ETF: (FXE, UUP))
Still ranging flat Wednesday morning didn’t undermine the outstanding requirement for the confirmed breakout to produce its minimum eventual third higher close. Surging out of the FOMC statement closed above 1.1485 to fulfill the minimum objective, while also suggesting much more follow-through to the upside.
Gold Apr Contract (GC, ETF: (GLD))
Already probing higher overnight to within $5 of the 1325.00 target (basis Apr, 1319.50 basis Feb) was retraced back into Tuesday’s range. The FOMC statement triggered a post-close surge that fulfilled the target. No higher objective is in-play, but an immediate reversal down in this pattern is unlikely.
Silver Mar Contract (SI, ETF: (SLV))
Fresh highs overnight retested the prior high that had preceded the interim downtrending channel. A post-close surge to fresh highs above 16.05 suggests the rally will extend higher.
30-year Treasury Mar Contract (US, ETF: (TLT))
Wednesday’s narrow sideways range seemed oblivious to the FOMC events. A second consecutive higher close would have confirmed the recent strength, so delaying an upleg much beyond Thursday morning would start to become bearish.
Crude Oil Mar Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Wednesday morning’s rally to fresh highs attacking 55.00 was retraced back down to “lower prior highs” at 54.15. The rally effort remains intact.
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Flat ranging at the lows is greeting Thursday’s EIA report from a position of weakness. A fresh low in the sequence is likely before any durable rally can be credible.
Mid-day Update… High expectations.
Strong rally ahead of FOMC.
The post-open dip down to this morning’s 2647.00 bias-up signal held to maintain the bias-up, quickly extending back up to and through the 2653.00 bias-up target. Well through it. To and through last Friday’s 2660.00 “higher prior lows” and up to 2667.00.
That’s pretty optimistic ahead of an FOMC policy statement and Fed chair Q&A. Reacting down through the noon hour’s exit is testing 2657.00, and reintroducing some pessimism. A favorable reaction to the news won’t be as difficult.
A favorable reaction to the news also isn’t required to be maintained. A favorable reaction isn’t required at all. But closing above 2666.00 would start requiring the rally to resume. And having probed 2666.00 intraday, closing back under 2656.00 would suggest the bounce is done.
Look ahead: Economic Calendar – for Thu Jan 31, 2019
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: No reliably influential pre-open reports Thursday, but any noticeable reaction is likely to be duplicated in reaction to the post-open report. And that’s a reliably influential report, with its private release to its own institutional subscribers producing a reaction that tends to repeat when its data are released publicly several minutes later. AMZN reports earnings post-close.
Challenger Job-Cut Report
7:30 AM ET
Jobless Claims
8:30 AM ET
Personal Income and Outlays
8:30 AM ET
Employment Cost Index
8:30 AM ET
*Chicago PMI
9:45 AM ET
EIA Natural Gas Report
10:30 AM ET
Farm Prices
3:00 PM ET
Afternoon Bias
| WED afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2664.75 | 2663.50 |
| …would target | 2671.25 | 2670.00 |
| Bias-down: under | 2655.25 | 2653.75 |
| …would target | 2646.50 | 2645.00 |
| Signal status: NO-BIAS, TESTED BIAS-UP SIGNAL | . | |
| BIAS VIDEOS… INTRO // EXAMPLE | ||
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.