Posts by Rod David
Pre-market Tour (recording & summary)
A pessimistic dip down to 2164.25 greeted this morning’s Employment Situation report. Its reaction spiked up to the 2174.25 area, and has since eked higher to touch 2176.00. The bias-up target is another point higher.
That’s a traditional reaction to report’s “disappointment,” which seems to take off the pressure from the Fed raising rates. But a traditional knee-jerk reaction was always expected. It’s the follow-through that matters. And exceeding the 2177.00 bias-up target at 10:15 — i.e. renewing the bias-up signal next targeting 2181.25 — would signal that buyers are following-through.
Otherwise, not renewing the bias-up would likely range flat-to-lower this morning. And that’s only if bias-up is triggered. This being Friday, a few disappointed buyers can become hordes of aggressive sellers within minutes. Not triggering bias-up at 10:15 could be very bearish.
Details and other markets coverage are discussed in the pre-market Tour recording here.
The First Trade… Damned only if they don’t.
Proper context can start the day with a solid win and make all the difference.
(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Thursday morning’s plunge from 2172.00 down to 2154.00 was recovered up to 2168.50 during the noon hour, and the balance of the session ranged choppily sideways. The recovery’s momentum was spent, pre-payrolls anxiousness was looming, and holiday illiquidity wasn’t far behind. Last Friday’s low was likely to be probed and not just attacked such as at Wednesday’s low. And it wasn’t likely to be broken by an attempt after Wednesday’s close. So, the recovery quickly followed after neutralizing Wednesday’s “unfinished business below” at 2156.50.The afternoon’s 2170.75 bias-up target was left outstanding..
Overnight action’s new info…
After one night’s absence, narrow ranging has returned. That’s now four out of five overnight ranges limited to 4-5 points. Where the prior instances were due to nothing stimulating enthusiasm, now price is constrained by fear of coming news.
If, then…
I’ve noticed the market hasn’t rallied this week on traditionally bullish news of weaker economic reports. Those data would suggest the Fed won’t raise rates, which the market now seems to want — if only to get it over with. An initially negative knee-jerk reaction to the prospect of a hike can’t be avoided, nor should it be. But patterns suggest the negative reaction would likely be only temporary. Weaker payrolls would suggest the opposite, triggering selling into the weekend — especially now that last Friday’s low was chipped away Thursday. Otherwise, genuinely strong employment growth that seems to force the Fed’s hand could be very bullish after prices first dip… REMINDERS: I WILL BE AWAY FROM THE SCREENS AFTER THE NOON HOUR. AND THIS BEING A HOLIDAY WEEKEND, THERE IS NO SATURDAY REVIEW. WE WILL HAVE AN EARLY AND EXPANDED MARKET WRAP...
First Trade…
[Click here to view the Bias parameters] There is no preliminary indication ahead of Employment Situation reports.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2172.00 | 2170.75 |
| …would target | 2178.25 | 2177.00 |
| Bias-down: under | 2162.25 | 2161.00 |
| …would target | 2157.00 | 2155.75 |
| 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 (Summary)
It’s not surprising to boot up and log in this evening to see the market did nothing significant after I left early. Firstly, the market is known for accommodating everyone’s schedule. Secondly, I willed it not to produce any surprises. And thirdly, the morning recovery’s momentum was running into anxiousness ahead of Friday’s Employment Situation report.
Like the prior two sessions’ recoveries, Thursday’s also stopped short of closing above a relevant resistance. Afternoon buyers gained no traction for their efforts. Extending higher Friday morning would require gapping up. Payrolls offers a catalyst, but that’s no assurance.
Meanwhile, I’ve noticed the market hasn’t rallied on traditionally bullish news of weaker economic reports. Those data would suggest the Fed won’t raise rates, which the market seems to want — if only to get it over with. Weaker payrolls could cause quite the decline into the weekend — especially now that last Friday’s low was chipped away Thursday. Otherwise, genuinely strong employment growth that seems to force the Fed’s hand could be very bullish.
There was no post-market Wrap recording here due to travel.
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 Sep Contract (EC, ETF: (FXE, UUP))
Thursday’s gap down held at Tuesday’s opening low, before bouncing sharply into positive territory. A second consecutive higher close Friday would signal momentum reversing up. Otherwise, lower lows remain likely.
Gold Dec Contract (GC, ETF: (GLD))
Gapping down to test a fresh low Thursday at 1305.50 was recovered well into positive territory, testing bounce limits at 1312.30 and 1315.70. Closing any higher would signal a much bigger detour on the way down to 1296.00-1297.00.
Silver Dec Contract (SI, ETF: (SLV))
Silver’s recent relative outperformace against Gold helped it to avoid a fresh low Thursday, but its bounce up to 19.00 remained under the 19.15 prior week’s high that must hold to maintain near-term likelihood to retest overnight lows.
30-year Treasury Dec Contract (US, ETF: (TLT))
Gapping down sharply Thursday and extending to 169-06 was reversed back above Wednesday’s high to 170-27, as the sloppy, choppy range persisted ahead of Friday’s Employment Situation report. Closing above 170-02 could greet the news from a position of strength, but there otherwise remains no attractive setup.
Crude Oil Oct Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Extending down sharply Thursday tested the next lower attraction at 43.45. The second consecutive lower close under a multi-session range now requires there eventually be at least a third lower close. Bounces should meanwhile hold any test of 43.90-44.20.
Natural Gas Oct Contract (NG, ETF: (UNG, UNL))
Greeting Thursday’s EIA report from a position not of weakness didn’t prevent reacting down to retest the 2.82 sell signal, and probing it deeper than Tuesday’s test down to 2.78. A second consecutive lower close would confirm momentum reversing down. Otherwise, closing back above 2.88 would again be credible for extending higher.