Posts by Rod David
The First Trade… Coming due?
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 was the second consecutive morning to rally despite the prior session’s rally not having gained traction. The consequence of that setup is failure, and once again all of the morning’s gains were returned. Despite finally closing above the rally’s objective (2110.75 Jun, 2102.00 Sep), the next higher thoroughly tested resistance held once again (2116.00-2119.00 Jun, 2107.00-2110.00 Sep). No higher objective was put into play, and “unfinished business below” was left outstanding at the morning’s bias-down signal (2106.50 Jun, 2098.00 Sep) — like a slow-leaking helium balloon that is now adding ballast.
Overnight action’s new info…
Only trending down since yesterday’s close, yesterday morning’s low (2111.25, 2102.50 Sep) is being probed down to 2109.25 Jun, 2100.00 Sep). That’s still a couple of points short of fulfilling yesterday’s “unfinished business” at the prior night’s low.
If, then…
[The front-month rolls forward at the open from Jun to Sep. Bias values have been updated on the blog and below.] While the last two morning rallies were doomed to failure, consequences have been limited to retracing only the gains. Typically, there is also punitive damage to the chart, reversing back under some prior lows — even if only intraday. A more powerful upward undercurrent should have been obvious quickly if it were the cause of this current instance’s different outcome. Each overnight dip under the intraday low wouldn’t be appropriate. So the likelier scenario continues to be that the ultimate consequences are being pent-up into a larger topping pattern. All of which has yet to be triggered by sellers actually retaking control — which could unfold quickly at this stage of the template. Not already trending down into the noon hour would make another rally leg likely into the weekend.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2105.50 would be unlikely to trigger the 2103.00 bias-down signal at 10:15. Exiting the open under 2100.00 would be likely to trigger bias-down.
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2121.50 | 2111.00 |
| …would target | 2126.50 | 2116.00 |
| Bias-down: under | 2113.50 | 2103.00 |
| …would target | 2107.25 | 2097.75 |
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2121.50 | 2111.00 |
| …would target | 2126.50 | 2116.00 |
| Bias-down: under | 2113.50 | 2103.00 |
| …would target | 2107.25 | 2097.75 |
| 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)
The rally had its best opportunity to extend upon exiting Wednesday afternoon’s bias environment. But trending up to a fresh session high at 2119.75 was retraced into the final hour’s entry. Its reaction down held 2116.50, but the balance of the session only ranged choppily sideways.
Another missed opportunity to extend the rally was not to close above 2119.00. And not for lack of trying — or, at least, lack of proximity. Bouncing from the 2116.50 dip up to 2119.00 only reacted back down. Closing above 2119.00 would have started signaling resistance was deteriorating.
Meanwhile, “unfinished business below” was left outstanding from the morning at 2106.50. But if still not resolving down Thursday morning, the rally becomes more likely to extend higher up to 2125.25.
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… Precariously positioned.
Poised at the highs, waiting for another shoe to drop.
The burden of proof remains on sellers, having failed to regain traction. No matter how suspect the upside action, holding above relevant support through relevant windows does not equate to reversing momentum down.
Probing fresh session highs into new timing windows is bullish. This afternoon’s bias environment started lapsing back at 2118.00. That’s an appropriate time for productive sentiment to be more reliable. Optimism was producing fresh highs, so the burden of proof on sellers is only greater.
Not that buyers have exploited that burden. The final hour was entered back at 2118.00 — not yet trending up, despite a blip-up to 2119.75.
Back under 2117.00 would suggest that stronger sellers have arrived. Their objective continues to be fresh session lows, and deeper. Otherwise, extending higher would be attracted to 2120.25 and 2122.25, if not also 2125.25.
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 attempted to fulfill the minimum third higher close required by Friday’s confirmed breakout. Gapping up makes an immediate reversal down unlikely.
Gold Aug Contract (GC, ETF: (GLD))
Despite Monday’s less-than optimal confirmation of Friday’s breakout, Tuesday’s test of the 1236.50 pullback limit extended sharply higher overnight. The 1260.00 target was met at Wednesday’s opening gap up, and probed. Upside momentum remains intact so long as pullbacks hold 1256.50 as support.
Silver Jul Contract (SI, ETF: (SLV))
Barely filling the gap Tuesday back to Monday’s close didn’t prevent extending sharply higher overnight. Surging through the 16.60 buy signal Wednesday extended higher through the morning, next targeting resistance at a gap back to 17.15.
30-year Treasury Sep Contract (US, ETF: (TLT))
Retesting 167-00 Wednesday morning was unlikely to extend since the interim pullback was relatively shallow and had optimistically recovered quickly. Reversing down would be triggered by closing back under 166-12.
Crude Oil Jul Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Fresh highs overnight held up through the morning, attacking the 51.45 objective up to 51.35. Reversing down immediately would leave a gap outstanding that requires being filled, but would at least confirm this area is resistance.
Natural Gas Jul Contract (NG, ETF: (UNG, UNL))
Not first pulling back to 2.40 before rallying made Wednesday’s probe of fresh highs at 2.50 more difficult to extend. EIA is still being greeted from a position of strength, although a pullback would still be helpful. A knee-jerk reaction down must hold 2.35 to avoid reversing momentum down.