Posts by Rod David
The First Trade… One hour up, one night down (plus: Special Note)
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)
Special note…
I’ll be unavailable during today’s final hour. There will be no Market Wrap or recording. Blog updates will be delayed until early evening. Thank you for allowing me this flexibility!
Through the prior close…
Monday morning’s slide from 2101.50 extended down to the last hour at 2086.00. The last 5 points were no-bias trending that required being retraced. Which they were. Trending up through the final hour had touched 2097.25 before a last-minute plunge to 2090.50. It was too late to be relevant to the pattern, which otherwise recovered back above the noon hour’s 2094.75 high.
Overnight action’s new info…
A push higher before midnight got back to 2099.25, 2 points above Tuesday’s last-minute high. But price action since then has only trended down. The 2089.00 area put up a fight, but now 2087.00 is being attacked, 1 point away from yesterday’s last hour low.
If, then…
Tuesday’s final hour recovery began too late for it to have gained traction, so extending it without delay requires gapping up. Gapping up depended greatly on extending bounce overnight, or at least not retracing it. So far, either bias signal has been tested, with the bias-down signal struggling to hold. Probing it could recover in time to avoid triggering — trending back above yesterday’s range wouldn’t be credible before the afternoon bias environment had begun lapsing. Otherwise, regardless of any “unfinished business above,” another session of backing-and-filling would be likely — at least until the afternoon’s Beige Book release.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2086.75 would be likely to trigger the 2089.00 bias-down signal at 10:15. Exiting the open above 2092.75 would be unlikely to trigger bias-down.
Morning Bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2102.00 | 2099.75 |
| …would target | 2109.00 | 2107.00 |
| Bias-down: under | 2091.00 | 2089.00 |
| …would target | 2084.75 | 2082.50 |
| Signal status: noN-BIAS, TESTED BIAS-DOWN SIGNAL | 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)
Was Monday’s drop from 2101.50 an unscheduled detour? Isolating it to the morning would have been perfectly acceptable within the pace and slope of characteristics likely for this recovery leg.
The afternoon’s 2086.00 lower low can be dismissed because it was reversed back above the noon hour’s 2094.75 high. The morning’s 2096.25 bias-down signal was overlapped by 1 point. A last-minute plunge to 2090.50 is irrelevant, having originated AFTER coming within 3 minutes of the cash session close.
Greeting Wednesday’s open back at or above Tuesday morning’s 2101.50 high should not delay extending higher through the morning. The holiday’s 2093.75 Globex high requires a retest intraday, and the next higher attraction is 2116.00-2119.00. Otherwise, resuming Tuesday’s decline would all but require gapping down Wednesday under 2086.50.
Details and other markets coverage are discussed in the post-market Wrap recording here.
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))
Fresh lows during the US holiday weren’t repeated Tuesday, as the session ranged narrowly sideways. Bottoming potential is increasing, but must still be triggered above 1.1205. And meanwhile a retest of Monday’s lows is possible.
Gold Aug Contract (GC, ETF: (GLD))
Extending down during the US holiday could have been a second consecutive lower close confirming Friday’s close under the decline’s target that had held through Thursday’s close. Tuesday’s steep rally suggests otherwise, but doesn’t yet qualify for a buy signal.
Silver Jul Contract (SI, ETF: (SLV))
Gapping down Tuesday to the holiday’s lows testing 16.00 broke away from the ranging around 16.50, which should not be confirmed by a second consecutive lower close if any near-term recovery remains plausible.
30-year Treasury Sep Contract (US, ETF: (TLT))
Gapping down Tuesday to retest the 163-16/163-16 pullback limit found no support to inhibit a plunge back to prior lows at 163-03. But the leg was retraced entirely, and reversed into positive territory to retest the original 164-17 buy signal. It’s too late to trigger that, but almost any follow-through Wednesday would be credible for extending higher to at least test the 164-26 new buy signal.
Crude Oil Jul Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Avoiding a close under the 49.00 sell signal last week had created potential for retesting the 49.95 prior target. Its retest Tuesday was reversed back into negative territory to test the 49.00 sell signal. Its break would target a probe under 47.25.
Natural Gas Jul Contract (NG, ETF: (UNG, UNL))
Two consecutive sessions chipping away at the 2.18 buy signal into the weekend greeted the new week gapping up to the 2.24 confirmation and extending sharply higher intraday to test 2.30. Closing higher Wednesday would seal a bottom.
Mid-day Update… A little bit deeper now.
Testing supports, not gaining traction.
This morning’s plunge from testing the 2101.00 bias-up signal eventually extended down to test its 2096.25 bias-down signal. That would have been required by dipping just moments earlier to trigger no-bias. It was done anyway.
Delaying the break actually created more potential downside. No-bias would have required holding the bias-down signal. Instead, noN-bias removed any limitations to the morning’s range. And its break extended the drop to test the 2091.25 bias-down target, which would have been required if 2096.25 had broken lower earlier.
2091.25 had become this afternoon’s bias-down signal. Like this morning’s bias-down signal, it didn’t trigger. It could have triggered, unlike this morning’s signal.
So, are sellers finally done?
The bigger picture premise maintains the likelihood for resuming the rally. This morning’s detour was acceptable, but now risks upsetting the recovery’s slope by persisting into the afternoon. Being a no-bias environment, the 2097.00 bias-up signal should define the range’s upper-end until the bias environment begins lapsing at 2:30.
Fresh lows have room down to 2089.00 before signaling a much deeper pullback underway. New highs would remain likely, but the detour would be undefined.