Posts by Rod David
The First Trade… All eyes on ECB.
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 open needed only to fill the gap back up to Tuesday’s 2185.50 cash session close before it would be vulnerable to reversing down. The open did more than that, briefly probing above Tuesday’s last-minute 2186.75 high, and then reversing down, forming a Pivot Reversal structure. Reversing down persisted through the noon hour to 2177.50. The balance of the session trended back up to 2185.50. No unfinished business was left outstanding, but the morning’s Pivot Reversal structure identified buyers as weak-handed.
Overnight action’s new info…
Yesterday afternoon’s recovery had begun firming to greet Europe’s opens another point higher at 2186.50. The immediate reaction extended to fresh highs at 2189.25. That has since been retraced down to 2185.50 ahead of this morning’s ECB policy statement.
If, then…
Wednesday’s Pivot Reversal structure essentially requires a retest of the morning’s 2177.50 low. Not having done it already Wednesday makes it very likely to be done Thursday. So, gapping up and probing higher this morning would remain extremely vulnerable to reversing down sharply this afternoon. Regardless of the gap up that futures currently indicate, the actual open will depend more on reaction to the ECB monetary policy statement and ECB chair Draghi’s Q&A. Gapping up above yesterday’s high can ignore buyers not gaining traction yesterday, albeit probably only for the morning.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2189.00 would be likely to trigger the 2187.00 bias-up signal at 10:15. Exiting the open under 2183.50 would be unlikely to trigger bias-up.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2188.00 | 2180.50 |
| …would target | 2193.00 | 2185.75 |
| Bias-down: under | 2180.50 | 2173.25 |
| …would target | 2174.75 | 2167.25 |
| Signal status: BIAS-DOWN | 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 morning trapped shorts. Gapping down slightly to 2181.50 was recovered to probe slightly above Tuesday’s prior high to 2186.75. The recovery was rejected resoundingly, reversing down through the noon hour to test support at the morning’s 2177.75 bias-down signal.
Ending the session there would have formed a bearish Pivot Reversal setup. It’s still bearish, so long as the initial rally’s peak wasn’t recovered through the close. It wasn’t. So, spending the balance of the session rallying89 points to 2185.50 wasted buying pressure.
More so, 2185.50 neutralized the afternoon bounce’s attraction. And no traction was gained for the effort. Gapping up Thursday above Wednesday morning’s 2186.75 high could still probe higher during the morning, and would still be vulnerable to rejection. Meanwhile, probing under Tuesday’s 2177.50 low is likely Thursday.
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… Back to that corner.
Recovery attempt should fail here, if at all.
Exiting this morning’s bias environment under the open’s low completed a rejection of the interim probe above yesterday’s high. This is a bearish setup, likely to resolve down over the course of several sessions.
The burden of proof is now on buyers to recover the interim probe’s 2186.75 high through the close. Exiting the afternoon bias environment above the noon hour’s 2182.00 high did create potential for buyers to gain traction. Trending up through the 3:10-3:20 proxy window would confirm.
Otherwise, reversing back down under the noon hour’s 2177.50 low is likely this afternoon or tomorrow morning, extending much more substantially into Friday morning.
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))
Friday morning’s high will likely hold its retest by Tuesday’s surge, but probably not without first probing higher intraday to test 1.1300. Wednesday didn’t probe positive territory at all, but the setup remains intact.
Gold Dec Contract (GC, ETF: (GLD))
Probing slightly higher after Tuesday’s close didn’t use all available room up to 1361.00, and closing Wednesday back in negative territory helps to maintain the bounce’s label as being only corrective. Back under 1343.00 would signal the trend reversing back down.
Silver Dec Contract (SI, ETF: (SLV))
Already dipping into Wednesday’s open extended down to test its 19.85 pullback limit. Closing under 19.75 would signal the trend reversing back down to retest recent lows.
30-year Treasury Dec Contract (US, ETF: (TLT))
Gapping up Wednesday to the sloppy, choppy range’s 171-02 buy signal and probing above it was nevertheless reversed to fill the gap back down to Tuesday’s 170-21 close. Closing negative would make the setup bearish, reversing momentum down under 170-00. Otherwise, it may be a warning shot, clearing the path for a more productive surge that puts into play 176-10.
Crude Oil Oct Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Not rejecting the 44.20 bounce limit’s repeated tests had left the door open to retesting Sunday night’s 46.53 high, or to at least attacking it up to 45.80. Gapping up Wednesday did extend higher, and closing Thursday back under 44.20 would signal the decline has resumed. EIA is reporting this week on Thursday due to the holiday.
Natural Gas Oct Contract (NG, ETF: (UNG, UNL))
The four-day sequence greeting Wednesday’s session did not fulfill its likely recovery from probing negative territory intraday. The setup did play-out overnight — recovering from 2.69 up to 2.74 — but repeating it intraday fell to 2.66. Closing back above 2.71 would reverse momentum back up, and avoid yet another lower close. But Thursday’s EIA report is otherwise being greeted from a position of weakness.