Posts by Rod David
Look ahead: Economic Calendar – for Wed May 25, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Wednesday’s post-open PMI has a track record for influencing price action. So does the EIA report, but less and less so. The Fed speaker’s timing will help to keep volatility alive.
MBA Mortgage Applications
7:00 AM ET
International Trade in Goods
8:30 AM ET
FHFA House Price Index
9:00 AM ET
*PMI Services Flash
9:45 AM ET
*EIA Petroleum Status Report
10:30 AM ET
*Robert Kaplan Speaks
1:00 PM ET
5-Yr Note Auction
1:00 PM ET
Afternoon Bias
| TUE afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2075.75 | 2073.00 |
| …would target | 2080.25 | 2078.50 |
| Bias-down: under | 2069.25 | 2066.50 |
| …would target | 2064.00 | 2061.00 |
| Signal status: noN-BIAS, BIAS-UP SIGNAL TESTED | 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… Session-long rally.
Is the setup over-promising?
Having trended down into yesterday’s close, gapping up above yesterday afternoon’s highs formed a “session-long rally” setup. Follow-through was productive. Very productive.
I noted in the pre-market Tour that this leg’s minimum objective was 2068.00, with room for noise above it to 2072.00. That room was touched momentarily.
Meanwhile, 3-minute RSI was persistently overbought. That offered the confidence not to sell, let alone not to short. It is still overbought. Pullbacks have room down to 2066.50 without threatening the uptrend. The session-long rally makes that unlikely.
Each timing window with one exception should probe above its prior timing window. That exception tends to be the noon hour. The next potential target is 2080.50.
Pre-market Tour (recording & summary)
The overnight rally has extended considerably higher, touching 2058.00. Being in position to trigger a “session-long rally,” not also triggering the 2053.25 bias-up signal would invert the setup. This should be a very interesting day, either way.
Details and other markets coverage are discussed in the pre-market Tour recording here.
The First Trade… This time might catch.
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…
Monday’s “inside day” had a lot of swings like its overnight action. But its range was narrower, not testing either bias signal intraday. And it barely avoided ending unchanged except for a late break down to 2044.00. Still, two dry cleaners windows — both the morning and afternoon bias environments — 
make that late break dubious, despite it extending to a fresh session extreme before coming to within 3 minutes of the cash session close.
Overnight action’s new info…
Another wide-ranging overnight session… second time’s a charm? Monday’s late break immediately began bouncing, until a couple of tests of 2047.50 launched a new downleg. It stopped 2 points short of its potential to 2039.50 of the false break that I described yesterday. But price action has otherwise tracked the pattern perfectly, launching a rally at Europe’s opens which has extended up to 2053.00.
If, then…
The next element of the recovery setup we discussed yesterday is to gap up above Monday’s 2054.00-2056.00 highs. Quickly probing them would be credible, too. Just beware the risk of yesterday’s two dry cleaners windows being followed by a third. Avoiding that paralysis could produce a session-long rally today. Last night’s reversal may be different from Sunday night in one important way, by not greeting the open unchanged, at a starting stop.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2054.00 would be likely to trigger the 2053.25 bias-up signal at 10:15. Exiting the open under 2050.50would be less likely to trigger bias-up.