Posts by Rod David
The First Trade… Oh, what a night.
fProper 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…
Sunday night’s test of 2059.50 resistance was reversed down to 2049.00 into Monday’s open. That range essentially defined the session. A quick surge attacked 2059.00 before reversing almost as quickly to 2048.50. Recovering the opening surge reversed down again, ending the day unchanged at 2054.00. Buyers gained no traction, and three opportunities failed to launch a rally. Meanwhile, sellers also failed to exploit even greater opportunities to resume the ongoing decline.
Overnight action’s new info…
Monday’s session had ended by reacting down from attacking 2059.00. The Globex open immediately resumed the reaction, plunging to 2048.00 and retesting Monday’s pre-open and intraday lows. Identical to those earlier drops, price both reversed up abruptly, and also extended to attack 2059.00. But this time was different. Europe’s opens followed a pop-up to 2062.50, and then soon followed by a bigger surge to 2068.00. Eventually touching 2069.25 has reacted down, gradually back to 2064.00 and now aggressively to attack 2060.00.
If, then…
Monday’s bias environment exit was borderline for gaining traction, no matter how decisively the final hour was entered. We knew at yesterday’s close that resuming the rally this morning would require gapping up. And we suspected that would happen since sellers had failed to exploit intraday vulnerabilities. Gapping up must be maintained and preferably also extended to prevent reversing back down post-open — especially having met 2068.00 resistance after ending yesterday’s session unchanged.
First Trade…
Exiting the open at 9:45 above 2066.00 would be likely to exceed the 2063.25 bias-up target at 10:15 and renew the bias-up signal. Exiting the open above 2061.00 would be likely to trigger the 2057.75 bias-up signal. Exiting the open under 2054.25 would be unlikely to trigger bias-up.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2063.75 | 2057.75 |
| …would target | 2069.00 | 2063.25 |
| Bias-down: under | 2056.50 | 2049.75 |
| …would target | 2050.75 | 2044.75 |
| 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)
Obligatory resistance at Monday morning’s 2058.50 high wasn’t recovered before the close. Pressuring price down through the 3:10-3:20 timing window prevented confirming that the final hour’s entry above the bias environment’s high had gained traction. Trending up Tuesday morning is unlikely without gapping up.
The pressure persisted into the cash session close and down to unchanged at 2052.25. Holding 2056.00 as support, or recovering it, would have made an overnight rally a little likelier. It’s still possible, but it’s still not required.
Without signaling a recovery is underway, the door remains open to resuming the ongoing decline. More than retesting Friday’s 2030.50 pre-open low down to 2027.00, resuming the ongoing decline would mean sharply lower lows. And it would probably begin aggressively by gapping down.
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… Game on.
Entering the final hour in rally mode.
The afternoon’s bias environment held its resistance at the 2056.00 bias-up signal. A dip to 2052.00 was largely retraced as the bias environment began lapsing. It was only several ticks, but that little bit of direction at that very important time gave offered a much greater degree of confidence in the upside.
Now the morning’s 2058.75 post-open high has been touched. Reacting to its obligatory resistance has formed a flag-like consolidation there that is now dipping back toward 2056.00.
Resuming the rally would imply that the 2-1/2 week old decline had ended, and that momentum is reversing up. Perhaps not the entire final hour, but much of it, could extend above 2061.00 to attack 2066.00-2068.00. Just trending up to fresh highs through 3:10-3:20 would indicate that tomorrow morning will trend up, too.
There’s otherwise no bullish reason to further delay extending higher. Especially no bullish reason to hold yet another test of 2059.50 — its resistance isn’t being chipped away if not exceeded through a relevant window. If not already underway into the close, then a bearish scenario would start tomorrow aggressively, if not overnight.
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))
Narrow ranging Monday while commodities crumbled might suggest stability, but it is more likely anxiousness that should compensate for the delay by extending sharply to its 1.1245 target when its trending resumes. And that trending is likely to be down, having triggered its 1.1485 sell signal Thursday, despite not confirming it Friday.
Gold Jun Contract (GC, ETF: (GLD))
Despite Friday having exploited the pullback’s second chance at triggering a reversal above 1282.70 — and that reversal having extended sharply higher intraday — China warning against a near-term recovery sent commodities sharply lower overnight. Opening Monday at the 1271.00 area prior lows was extended lower intraday, allowing the reaction to extend to 1241.00 before being able to launch another recovery attempt.
Silver Jul Contract (SI, ETF: (SLV))
Struggling to maintain its intraday recovery above 17.50 Friday was unable to absorb Sunday night commodity crash in reaction to China’s warning. Already testing 17.00, the pullback has little chance of avoiding lower lows at 16.75.
30-year Treasury Jun Contract (US, ETF: (TLT))
Regardless of how much intraday gain had been retraced, closing Friday above 165-00 kept alive the rally’s momentum. Firming Monday instead of surging again does suggest that optimism is restrained, which is potentially bullish from a contrarian perspective for extending the rally to 166-30 and 167-26.
Crude Oil Jun Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Probing the 45.75 buy signal by 20 cents Sunday night didn’t assure closing above it Monday, especially when the morning started reversing back down to attack recent lows around 43.25. The path back up has come to require testing a fresh low, which must hold 42.50 to avoid already reversing the trend down.
Natural Gas Jun Contract (NG, ETF: (UNG, UNL))
If Friday’s dip to 2.05 will suffice as retesting last Monday’s 2.03 close, then its reaction shouldn’t delay recovering 2.14 to launch the next upleg. Monday’s narrow ranging didn’t even threaten it, so any further delay would all but require testing 2.03.