Posts by Rod David
Mid-day Update… Walking into an ambush?
Extending higher, but there might be a problem.
This morning’s rally extended to fulfill its next higher objective at 2071.00-2072.00 up to 2072.75. A shallow correction down to 2069.25 resolved up to fresh highs. The afternoon’s 2072.25 bias-up signal was still being overlapped at both 1:20 and 1:30 to trigger noN-bias.
Fresh highs are attacking 2076.00. The 2077.50 bias-up target doesn’t require being met, but it can be, and the next higher objective is 2080.50.
One thing I had not considered previously was a “session-long rally” setup. The setup triggers in rejection of the prior day’s closing dip, by gapping up above that prior afternoon’s bias environment high.
Yesterday afternoon’s high printed AFTER the bias environment began lapsing, but before the final hour’s entry. So, the setup isn’t optimal. But I’m wondering, since almost every timing window would probe the prior timing window’s high. And every timing window HAS probed the prior timing window’s high.
Usually, the noon hour fails to probe higher. But not today — now only the final 60-90 minutes could be the setup’s exception, and not probe higher. It wouldn’t necessarily reverse down, but the shallow late-morning pullback has me a little concerned. Especially if the bias environment were exited back under this morning’s 2072.75 high, be on guard for a reversal down.
Look ahead: Economic Calendar – for Wed May 11, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Wednesday’s EIA report is reliable for influencing price action, even if only momentarily. In fact, its influence has been mostly momentary lately. But volatility can still be inhibited ahead of the release.
MBA Mortgage Applications
7:00 AM ET
*EIA Petroleum Status Report
10:30 AM ET
10-Yr Note Auction
1:00 PM ET
Treasury Budget
2:00 PM ET
Afternoon Bias
| TUE afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2078.00 | 2072.75 |
| …would target | 2082.50 | 2077.50 |
| Bias-down: under | 2073.50 | 2068.50 |
| …would target | 2069.00 | 2063.75 |
| Signal status: noN-BIAS, TESTED BIAS-UP SIGNAL | 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… Catching on.
Post-open action trends up.
Gapping up to 2062.25 quickly extended to 2065.50 and threatened to be too optimistic to be maintained. But an equally quick reaction down to 2062.25 corrected at least 61.8% of the open’s surge.
That hesitation was critical according to my description during the pre-market Tour. Probing fresh highs as the opening 15 minutes of volatility were lapsing was extended back to the 2069.25 overnight high. Reacting down to 2065.50 has been retraced back to the high.
Exceeding the 2063.25 bias-up target through 10:15 has renewed the bias-up signal. Its 2068.00 renewed bias-up target is met already, and not exceeded in time to doubly renew the bias-up signal.
Despite not doubly renewing the bias-up, extending higher would next target 2071.00-2072.00. Back under 2066.50 would target 2063.75. Extending higher gets a benefit of the doubt, and the consequence to reversing down is no longer as bearish. But this afternoon’s action should extend the rally if a reversal is going to be avoided.
Pre-market Tour (recording & summary)
The pullback from 2069.25 fell to 2057.50. Reacting back up to 2063.00 is indicating a gap up, which is the first step to rallying this morning. The second step is to maintain the gap up above 1261.00 through the opening 15 minutes of volatility.
A credible rally should gain traction quickly, albeit not necessarily at a steep pace. Otherwise, rejecting the overnight rally has barely begun, and a credible decline would fall steeply back to overnight lows, and then lower.
Details and other markets coverage are discussed in the pre-market Tour recording here.