Posts by Rod David
The First Trade… Very important update today.
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…
Tuesday’s “session-long rally” setup succeeded at producing each of its required elements, i.e. all but one timing window probed its prior timing window’s high. Gapping up above prior highs offered a highly-reliable early entry to capture almost all of the first hour’s 15-point first hour surge, which fulfilled the 2068.00 objective and touched its room for noise up to 2072.00. The next higher objective at 2080.50 was barely attacked to 2077.25, which reacted down 5 points into the close.
But the one timing window not probing higher was the afternoon bias environment, which prevented the rally from gaining traction for its effort.
Overnight action’s new info…
The rally resumed with little delay, attacking the 2080.50 objective, which is this morning’s bias-up signal. Surging to 2084.50 reacted down into Europe’s opens and consolidated at 2078.50. The rally resumed and extended to fresh highs within 1 tick of this morning’s 2085.75 bias-up target, now reacting down to 2082.50.
If, then…
So, is this time different? The past three weeks began with failed recovery attempts. Tuesday’s was no less convincing, rallying steeply throughout the day to test resistance. Tuesday’s attempt is offering something new — extending higher overnight. This was expected, as follow-through is normal following a session-long rally. More so, it maintains a steep slope, which we’ve long expected to characterize a valid recovery. It’s now threatening to invalidate the widely watched Head & Shoulders pattern, which I’ve noted wasn’t valid. And after the Friday-Monday hibernation, the wide intraday ranging appears to be back on-track.
[So sorry for the length this morning, but there’s a lot…]
What if this time isn’t different? Gapping up is the only credible start to a durable rally, since Tuesday’s rally didn’t gain traction for its efforts. But trending up overnight can invert to trending back down from the open, if the open were to hold a test of relevant resistance. Otherwise, Tuesdays breakout is in position to be confirmed by a second consecutive higher close. That would require at least one more higher close, and probably extend to new highs.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2076.00 would be unlikely to trigger the 2080.50 bias-up signal at 10:15. Exiting the open above 2082.00 would be likely to trigger bias-up. Exiting the open above 2088.00 would be likely also to exceed the 2085.75 bias-up target at 10:15 to renew the bias-up signal, next targeting 2091.50.
Morning Bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2083.50 | 2080.50 |
| …would target | 2088.50 | 2085.75 |
| Bias-down: under | 2073.75 | 2071.00 |
| …would target | 2068.50 | 2065.50 |
| Signal status: BIAS-UP, BIAS-UP 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)
Tuesday’s “session-long rally” setup succeeded at producing each of its required elements, i.e. all but one timing window probing its prior timing window’s high. The exception was the afternoon bias environment instead of the more common noon hour. And price didn’t trend up into the close as it often can.
A valid session-long rally is often followed by trending up through the next morning’s bias environment. It’s not required, and fulfilling it can follow an overnight dip. But if sellers haven’t retaken control at Wednesday’s open, then the morning will likely probe fresh highs.
Tuesday’s rally didn’t gain traction for its efforts, which requires Wednesday’s open to gap up if the rally is durable. So, probing fresh highs Wednesday morning without gapping up would be likely to trend back down in the afternoon.
All of the above is discussed in the Wrap. One other point we’ll discuss in the morning is that Tuesday was a breakout session. While a second consecutive higher close would confirm, be aware that the past three weeks have begun with either a Monday or Tuesday surge that immediately failed. C’est la vie!
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… Back to business.
Bias environment lapsing, so another fresh is likely.
One timing window during a session-long setup tends not to probe the prior window’s extreme. Usually, the noon hour is the exception, but today’s noon hour probed above the morning bias environment’s high. That left either the afternoon bias environment, or the final hour.
It was the afternoon bias environment. Its retracement wasn’t deep, only down to 2070.25, just 4 points off the high. So, if today’s session fulfills the session-long rally properties, then fresh session highs are on their way.
Technically, just probing above 2073.50 would fulfill the requirement, since that is the bias environment’s high. But often, the session-long setup will trend into the close, which keeps alive potential to 2080.50.
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 Jun Contract (EC, ETF: (FXE, UUP))
Gapping down and extending lower fulfills the new low close required by last week’s confirmed breakout. It also suggests this leg will extend to test 1.1055 so long as 1.1205 isn’t recovered.
Gold Jun Contract (GC, ETF: (GLD))
The longstanding 1241.00 target was met before Tuesday’s open. Extending down through the noon hour tested 1228.00, and next targeting 1223.00 so long as 1236.50 isn’t recovered.
Silver Jul Contract (SI, ETF: (SLV))
Gapping down Tuesday to Monday’s low reacted up to attack 16.50 to within only a nickel before reversing down to fresh lows. A second consecutive lower close Wednesday must be avoided to keep alive potential for near-term reversal back into an uptrend.
30-year Treasury Jun Contract (US, ETF: (TLT))
Three consecutive sessions testing the 164-17 buy signal without triggering it had left no bullish excuse to further delay extending higher. The consequences were realized quickly by Wednesday’s drop back down to the 163-16/163-22 pullback limit tested at Friday’s open. Closing below it would likely extend to fill one of both gaps outstanding back to the low.
Crude Oil Jul Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
The 47.75 sell signal had failed to trigger at Monday’s close, but Tuesday’s bounce didn’t reject it by only touching 49.00.
Natural Gas Jun Contract (NG, ETF: (UNG, UNL))
Monday’s reaction down to 2.05 from gapping up above 2.11 did not reverse up Tuesday. It didn’t even hold its room for noise down to 2.03. But Tuesday’s dip did fill the gap back below to Friday’s close, while leaving unfinished business above back up to Monday’s gap, still making a rally likelier than starting a new downleg.