Posts by Rod David
Post-open Review… It’s not always the best offense.
Post-open rally refuels sellers.
Rallying through the open became likely early enough to identify a 2038.25 buy signal. Its 2055.50 objective was met during the first half-hour. And then it was exceeded to attack 2065.00.
Recovering 2055.50 through the opening 15 minutes of volatility would have signaled the overnight selling pressures were absorbed. Instead, this morning’s bounce is more likely refueling sellers for a more substantial downleg. Overnight lows should be retested down to 1993.50.
The question is when. Today is possible, but the morning bias environment should begin lapsing in decline. Late-afternoon is possible if the open’s rally has only hovered through the afternoon bias environment. Otherwise, trending up further this afternoon could delay fresh lows until next week.
Pre-market Tour (recording & summary)
Will this be a 2500-point day? That’s basis the Dow, of course (for now). It’s coming, eventually. Circuit breakers for ES today will trigger 15-minute halts at 1965 and 1838. That impending illiquidity would only exacerbate the usual Friday Factors, which are a function of two days of impending illiquidity.
Recovering 2055.50 early enough could avoid all that. For now. Or, holding fresh lows testing 1993.50. Regardless, don’t be compelled to take any position — certainly not without pre-defining your parameters, and being disciplined to act on them.
Details and other markets coverage are discussed in the pre-market Tour recording here.
The First Trade… That’s going to leave a mark.
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…
Sharply higher overnight highs at 2102.00 were retraced through Thursday’s open down to 2089.75. That was the morning’s bias-up target, and touching it as support launched an up leg that fulfilled its 2099.50 target. Shallow ranging through the afternoon waited until the last half-hour before resolving up from 2098.00, rallying sharply again to fulfill its 2106.00 target. No traction was gained for the effort.
Overnight action’s new info…
Thursday’s late surge wasted no time extending even higher, already extending to 2113.25 before the Globex open, and just as quickly extending to 2119.50 after it. And that was the end of that. Results began arriving, quite different from the intraday and post-close optimism — a narrow win for Remain that should have been wide, a win for Brexit that was wider than anticipated. The first drop was technical, bouncing from 2104.50. The next drop plunged to Thursday morning’s 2089.75 low. One more plunge touched 2050.00. Its 40-point bounce back up to 2089.75 was reversed entirely, too, and kept reversing. Last week’s ~2041.00 low was ignored on the way down to 2025.00, and then to limit-down at 1999.00. Now a bounce up to 2043.50 has retraced 61.8% down to 2016.00.
If, then…
Long night. In some ways, it has seemed like a reunion. The above overnight re-cap lists so many levels that were so pivotal during the rally that is now being retraced. So, is this a correction? There’s no “unfinished business above,” since 2115.00 was met, by a singular non-complex probe which doesn’t qualify as a “new Globex trend extreme.” Is the trend reversing down into a bear market? Duplicating last night intraday would not be recovered for a very long time, and Friday Factors could facilitate that move. Remember that gapping from one end of a range to the other tends to react instead of extending, so this may be only the lower-end of a trading range. That principle certainly will be put to a test today, as the range’s lower-end is being approached at 1993.50, with potential to 1980.00. Bouncing first to 1950.50-1955.50 would be too much optimism, too soon to be sustained..
First Trade…
[Click here to view the Bias parameters] No preliminary levels apply (the understatement of the year)..
Oh, snap… (The rally’s back just made that sound.)
[SCROLL DOWN FOR CHART] Thursday’s late surge wasted no time extending higher after the ~2106.00 cash session close. Already extending up to 2113.25 before the Globex open, and then just as quickly extending again to 2119.50.
Then Brexit/Bremain results began arriving. Surprise. A narrow win for Remain that should have been wide, a win for Brexit that was wider than anticipated, and so on.
The first drop found support at 2104.50, which was Thursday’s opening print. The next plunge consolidated off of Thursday morning’s 2089.75 low. Yet another plunge touched 2050.00.
That last plunge fulfilled “unfinished business below” at 2073.75 and 2070.75. Its bounce was the biggest of all, 40 points back up to 2089.75.
That biggest bounce’s failure was the biggest of all, too.It was retraced entirely, from 2090.00 to 2023/25.
Bouncing again from here would likely test 2050.50-2055.50. Much higher for much longer would then have potential back up to 2090.00. No bounce to 2050.50 is at all required — but extending down without first bouncing would set a very bearish tone into Europe’s opens.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2115.75 | 2107.75 |
| …would target | 2122.75 | 2114.75 |
| Bias-down: under | 2106.75 | 2098.75 |
| …would target | 2101.25 | 2093.25 |
| Signal status: BIAS-DOWN, BIAS-DOWN 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.