Posts by Rod David
The First Trade… Warning shots.
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…
Wednesday’s late-afternoon 2112.00 low had pierced Tuesday’s low by a single tick. That was bearish enough to all but ensure lower lows on the horizon, whether immediately or delayed. Delayed. The last half-hour bounced up to 2119.50, almost all of it retraced by spiking down into the futures close. The stopped WedEX from triggering an optimal signal, other than it not rejecting the cumulative chipping away at support. It was a second consecutive close under 2134.00. But a hold-short was narrowly avoided, and overbought RSIs were left outstanding at the morning’s 2134.50 high.
Overnight action’s new info…
Initial firming was jolted abruptly by a 9-point plunge that was triggered by concerns over next week’s BOJ meeting. The fresh low tested “lower prior highs” from Sunday night’s consolidation down to 2108.00. Completely retracing the drop before Europe’s opens, the recovery extended well into positive territory to greet this morning’s BOE policy statement at 2123.25. The immediate reaction has dipped to 2118.00.
If, then…
I have been noting that this month’s WedEX seems capable of both trending and counter-trending, with substantial moves in either direction. Only several hours after triggering WedEX, we’ve already seen an example of each… Now the overnight rally might seem to make gapping down Thursday more difficult. Perhaps a little, but that’s a function of the recovery’s momentum, which has become quite stretched. The open is still the open, and this morning’s econ calendar is busy (5 reports simultaneously at 8:30!)… Testing Monday’s 2110.50 post-open low overnight has created an attraction that would soon be in-play if the open doesn’t immediately recover a dip back into negative territory. Actually gapping down under 2110.50 still would serve by proxy to trigger a Bearish WedEX. Otherwise, gapping up above 2134.00 is the minimum to even suggest a Bullish WedEX. It is meanwhile resistance.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2121.25 would be unlikely to trigger the 2124.25 bias-up signal at 10:15. Exiting the open above 2121.25 would be unlikely to trigger the 2114.25 bias-down signal. Exiting the open above 2127.00 would be likely to trigger bias-up.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2131.50 | 2124.25 |
| …would target | 2138.25 | 2131.00 |
| Bias-down: under | 2121.50 | 2114.25 |
| …would target | 2116.25 | 2109.00 |
| Signal status: BIAS-UP | 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)
Wednesday’s last half-hour bounced from 2112.00. Already having entrenched the downtrend by at least trending down throughout the 3:10-3:20 proxy window, the late bounce wasn’t going to produce anything bullish. It did manage to test what would have been a reliable buy signal above 2119.00, holding it throughout the position-squaring window. The futures close dipped back down to 2112.25.
Meanwhile, WedEX stopped short of triggering an optimal signal. The afternoon’s 2112.25 low only pierced yesterday’s prior low, and only by 1 tick. That’s hardly a test, so its reaction up is hardly a rejection. The pattern is more about chipping away at support than about holding it. And that’s less than optimal, as were the final hour’s entry and 3:10-3:20 window.
Gapping down Thursday — especially under Monday’s 2110.50 post-open low — would serve by proxy to trigger a delayed Active Bearish WedEX. Otherwise, gapping up above 2134.00 is the minimum to even suggest a delayed Bullish WedEX.
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… Putting the “under” in underway.
NOTE: Please disregard the prior blog post (“Mid-day update”) which was sent in error.
A supporting inflection point was established at 2124.25 coming out of this morning’s bias environment. Multiple tests into the afternoon’s bias environment finally broke lower. No-bias had triggered already, so the afternoon’s 2121.25 bias-down signal was required to define the range’s lower-end.
That didn’t prevent breaking under it to test this morning’s 2115.50 bias-down signal as support. But its timing was “no-bias trending” that required recovering back up to 2121.25. Testing and retesting it has resolved down to fresh lows — under yesterday’s lows to 2112.00.
The 3:10-3:20 proxy window trended down throughout, but only to touch the bias environment’s low. So, it’s not optimal confirmation to the bias environment having lapsed under the noon hour’s low, which the final hour’s entry did not confirm. Nevertheless, this current leg is targeting 2095.00, whether met today or tomorrow (likely today).
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 Sep Contract (EC, ETF: (FXE, UUP))
Tuesday’s probe under 1.1225 reacted back up Wednesday to retest 1.1265 resistance, which had held already Sunday and Monday. A new downleg has yet to be confirmed.
Gold Dec Contract (GC, ETF: (GLD))
Probes lower after Tuesday’s close and overnight didn’t extend down, but buyers weren’t attracted Wednesday as the 1329.00-1332.00 bounce limit continued to hold.
Silver Dec Contract (SI, ETF: (SLV))
Wednesday’s gap up tested the recent range’s 18.15 upper-end and spent the entire session in positive territory. But the range’s upper-end held as resistance, which is “ineffectual optimism” that should resolve down almost immediately if a bigger bounce will be avoided.
30-year Treasury Dec Contract (US, ETF: (TLT))
Gapping up slightly Wednesday and extending up to 166-12 held a test of the 165-30 bounce limit. Now holding a retest of Tuesday’s 164-22 low — especially if recovered to close positive territory — would form a bottom.
Crude Oil Oct Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Gapping down to fresh lows Wednesday found support at the recovery’s original 44.20 bounce limit. Reacting up into positive territory in reaction to the morning’s EIA report was rejected by a return to lower lows testing 43.45, confirming a retest of the 43.00-43.25 prior lows remains in-play.
Natural Gas Oct Contract (NG, ETF: (UNG, UNL))
Probing above prior highs overnight to 2.98 before reversing down intraday into negative territory at 2.85. Now closing back above 2.94 would confirm the 3.04 objective remains in-play..