Posts by Rod David
Mid-day Update… Dry grass, meet lit match.
News greets decline’s target, corrective bounce ensues.
The decline’s 2043.00 target was identified originally while the rally was still topping at 2110.00. Potential for bottoming at 2063.50 was all but dismissed Tuesday.
Gapping down today made 2043.00 likely to be tested this morning.
And it was, down to 2040.75. But that doesn’t equate to being a bottom.
A bottom might have formed around 2043.00. Isolating its test to one timing window, retesting it during another, and recovering to close above the morning’s 2054.00 high.
Still possible. But more difficult.
Tragic news surrounding Brexit triggered expectations for delaying next week’s vote. That wouldn’t be bearish. Its rumors were like throwing a lit match into the thick forest of selling pressures, which had dried out when its target was met
The 2053.00-2054.00 open was being tested at the bias environment’s exit. The noon hour filled the gap back up to yesterday’s 2062.75 cash session close. Consolidating back down to the 2058.00 bias-up target held and the bias-up signal has been renewed.
If the recovery extends higher today, let alone tomorrow morning — entirely possible, especially with bias-up renewed — then it would be at the expense of forming a durable bottom. Not retesting 2043.00 today would make its future retest less and less likely to hold.
Look ahead: Economic Calendar – for Fri Jun 17, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Neither of Friday’s two econ reports are reliable for influencing price action, although surprises are easier without other context. Meanwhile, so-called Quadruple Witch expiration will be much more influential.
*Quadruple Witching
Housing Starts
8:30 AM ET
Atlanta Fed Business Inflation Expectations
10:00 AM ET
*Baker-Hughes Rig Count
1:00 PM ET
Afternoon Bias
| THU afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2061.00 | 2053.00 |
| …would target | 2066.00 | 2058.00 |
| Bias-down: under | 2052.00 | 2044.00 |
| …would target | 2046.75 | 2038.75 |
| Signal status: BIAS-UP, BIAS-UP TARGET EXCEEDED | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
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.
Post-open Review… Better bottom.
Can the target form a bottom? Can it even hold.
The decline’s premise since topping at 2110.00 has been its likelihood for unfolding rapidly, and its potential to 2043.00. It unfolded rapidly, and 2043.00 has been met.
Its first test bounced to 2047.00 before reversing to fresh lows at 2040.75. The next bounce is now probing back above 2045.00. And triggering a buy signal.
The first reaction up from 2043.00 had targeted 2046.75. Its next reaction up would target 2049.00, so long as 2042.00 now holds as support.
Attacking fresh lows to within 1 point would be likely to break lower, and probably extend down substantially. Meanwhile, holding 2043.00 would allow a bottom to begin trying to form.
Pre-market Tour (recording & summary)
Bouncing to 2058.00 — one point short of this morning’s 2059.00 bias-down signal — has resolved back down to the earlier 2051.50 low. Renewing the bias-down signal is increasingly likely, by not holding the 2053.00 bias-down target through 10:15. And for all intents and purposes, although interim support might try to interfere along the way down, the long-standing 2043.00 target could be tested this morning. Long-entry would be considered only if renewing the bias-down signal becomes unlikely.
Details and other markets coverage are discussed in the pre-market Tour recording here.