Posts by Rod David
The First Trade… Lower.
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…
Overnight optimism ahead of Wednesday’s FOMC events left a little on the table for post-open gains. But only a little, and even less for the predictable relief “rally” (more accurately, a blip-up) on the no-change news. But it wasn’t very long after Yellen’s Q&A that a plunge fulfilled the balance of expectations by retesting 2063.50. It was still being tested at the close.
Overnight action’s new info…
Ranging couldn’t withstand the Nikkei plunging, triggering a break under Tuesday’s 2054.75 lows down to 2051.75. That’s where Europe’s opens were greeted, and price has firmed to 2058.00.
If, then…
The only variable to yesterday’s template not met was to probe or attack Tuesday’s lows. Delaying either would only require a probe. Isolating that to the overnight session would require recovering to gap up at Thursday’s open. Meanwhile, the 2043.00 objective remains in-play. And maintaining a gap down under Tuesday’s lows could make the Bearish WedEx become Actively bearish, albeit delayed.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2050.50 would be unlikely to recover the 2053.00 bias-down target through 10:15 and renew the bias-down signal. Exiting the open above 2060.50 would be unlikely to trigger the 2059.00 bias-down signal at 10:15.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2075.50 | 2066.75 |
| …would target | 2081.25 | 2072.75 |
| Bias-down: under | 2067.50 | 2059.00 |
| …would target | 2061.75 | 2053.00 |
| 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.
Post-market Wrap (recording & summary)
Wednesday’s likeliest scenario eventually played out. But its last leg down took awhile before unfolding. And that prevented the potential for an optional leg up.
Essentially, optimism for a favorable FOMC statement proved self-fulfilling, fully discounted upon triggering a knee-jerk reaction up. Quickly reacting back down seemed to put the market into shock — so little reward for longs attracted more buyers looking for a delayed pay-off.
Ultimately, the position-squaring window saw those earlier optimists running for the exits. The relevant 2063.50 level was being tested at the close, not recovered to start forming a bottom, and not broken to further confirm 2043.00 is in-play.
Bearish WedEX triggered. Not actively bearish, although gapping down Thursday under Tuesday’s 2055.00 lows could do that by proxy. Quickly recovering a gap down under Tuesday’s lows could form a passively bullish signal.
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… So, what’s new?
Unsurprising FOMC statement enables range to persist.
Today’s likeliest scenario has been tracked. So far.
Optimistic firming or rallying preceded the FOMC news. Volatility evaporated ahead of it. The news triggered an initially favorable knee-jerk reaction up. Fully discounting the news reacted back down to a fresh relative low.
Still awaiting the template’s next stage — trending back down well into yesterday’s range. Potentially through it.
This last stage has been delayed for awhile. Back under 2070.50 would target at least 2063.50. But back above 2073.75-2075.25 would target a fresh session high attacking 2080.75.
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))
Gapping up Wednesday was appropriate for helping to confirm that Tuesday’s gap down had only neutralized the attraction below without breaking lower. The FOMC reaction extended higher and filled the gap back up to Tuesday’s close. Retesting last week’s 1.1400 high remains in-play.
Gold Aug Contract (GC, ETF: (GLD))
Tuesday didn’t reject Monday’s surge, so with or without a pullback that would be likely to recover, the 1312.00 target above remains intact. Spiking up post-close in reaction to FOMC already tested 1300.00.
Silver Jul Contract (SI, ETF: (SLV))
Firming to a fresh relative high Wednesday morning continued the attack on the outstanding target above at 17.60. But it was fulfill in reaction to the afternoon’s FOMC news.
30-year Treasury Sep Contract (US, ETF: (TLT))
Overnight weakness tested the 168-20 pullback limit to enable Wednesday morning’s post-open rally. Recovering to within 3 ticks of Tuesday’s 167-27 high suggests the rally is resuming.
Crude Oil Jul Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Extending down even deeper after Tuesday’s API report, and then reacting up on Wednesday’s EIA, has not undermined the distributive pattern unfolding that should soon now be entering its capitulative stage.
Natural Gas Jul Contract (NG, ETF: (UNG, UNL))
Still not falling any deeper than Tuesday’s pre-open dip is starting to suggest that the 2.70-2.75 target will be met first. Meeting it without first correcting would make the target’s test likely to react down.