Posts by Rod David
Mid-day Update… Another objective met.
And positive territory probed.
Holding a test of this morning’s 2083.75 bias-down signal through 10:15 put into play an offsetting test of the 2092.75 bias-up signal. This objective has been met.
Yesterday afternoon’s rally had gained traction for its effort, making this morning likely to trend up. That objective has been fulfilled.
An offsetting test of this morning’s 2099.00 bias-up target isn’t required. Although the 2076.00 bias-down target was tested thoroughly overnight, it was tested only overnight.
But the bias environment is now lapsing, so its upper-end need not be defined by the bias-up signal. And there’s no bearish reason to have retraced back to yesterday’s highs. None of which prevents a reaction down, but any reaction down should be only temporary.
Post-open Review… Compartmentalize THAT.
Opening above yesterday’s lows marginalizes sellers.
Despite having dipped overnight down to 2070.25, opening above yesterday’s 2076.25-2077.50 lows could compartmentalize the bearish sentiment. Proof would come from maintaining that much of a recovery, and then also quickly extending it.
The 2080.25 opening print blipped-down 3 points before surging to and through the 2086.25-2087.00 objective I had described during the pre-market Tour. The gap back to yesterday’s 2089.50 cash session close has been filled to within 1 tick.
Only pre-open price action tested the 2076 bias-down target. So, recovering the 2083.75 bias-down signal puts into play an offsetting test of only the 2092.75 bias-up signal. Extending to the 2099.00 bias-up target this morning isn’t likely. Possible, but not likely.
Overbought RSIs at 2091.25 require its retest. Traction gained by yesterday afternoon’s rally suggest the recovery will extend this morning. Only violating a pullback limit at 2088.00 is creating an obstacle.
Actually, the two prior opening patterns are also obstacles to extending higher this morning. Similar to this morning, they also surged post-open, held tests of resistance, and then reversed down substantially. I’ll give the recovery credit so long as the 2083.75 bias-down signal holds as support.
Pre-market Tour (recording & summary)
Fulfilling the traction gained by yesterday afternoon’s rally all but requires compartmentalizing the overnight probe under yesterday’s 2076.25 and 2077.50 lows. Failing wouldn’t be for lack of trying, since the recovery from 2070.25 is now testing 2079.00. Near-term upside is likely to test 2086.25-2087.00, where the market can make a bigger bullish decision. But probing back under yesterday’s lows would be as bearish as its recovery is delayed.
Details and other markets coverage are discussed in the pre-market Tour recording here.
The First Trade… What FOMC giveth, BOJ taketh away.
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…
Wednesday morning’s choppy ranging in negative territory had dipped 10-12 points down to 2076.25, draining the market of optimism ahead of the afternoon’s FOMC statement. Its knee-jerk reaction down to 2077.50 stopped short of neutralizing oversold RSIs at the low before reversing up above prior highs to 2094.00. The rally gained traction by exiting the bias environment above the noon hour’s high and then trending to fresh highs through the 3:10-3:20 proxy window. A late dip fell to 2088.00.
Overnight action’s new info…
The last-minute dip was gradually recovered entirely, eventually touching 2094.25. The BOJ policy statement took a surprising twist by not increasing asset purchases. The Nikkei crashed 1000 points, while ES plunged 20 points to 2074.00. Bouncing to 2083.00 has resolved down to lower lows at 2070.25.
If, then…
Only the most die-hard Keynesian still truly believes there is an endless supply of stimulus. Unfortunately, those people tend to work for a central bank where they can keep playing that tune. Well, did their music just stop? BOJ’s decision seems truly to be a surprise, less because of the plunge it triggered, and more for coming after yesterday afternoon’s buyers had gained traction. So far, only Monday’s 2071.00 low is being retested, with room below it down to 2067.00-2069.00. Any lower could get ugly, but rallying back above relevant levels by mid-morning would suggest the surprise had been absorbed.
First Trade…
Exiting the open at 9:45 back above 2080.50 would be likely to hold the 2076.00 bias-down target through 10:15. Exiting the open above 2086.25-2087.00 would be unlikely to trigger the 2083.75 bias-down signal.
Post-market Wrap (recording & summary)
Wednesday’s 3:10-3:20 timing window trended up to fresh session highs. This confirms the rally gained traction by exiting the bias environment at 2:30 above the noon hour’s highs. And that makes Thursday morning likely to trend higher. It can be inverted by triggering any bearish setup at Thursday’s open.
Oversold RSIs were left outstanding at the morning’s 2076.25 low. Its retest is the only “unfinished business below” left outstanding. It had come within 3 ticks of the bias-down target, and the morning’s bias environment exit was recovering its 2081.00 bias-down signal. So, the detour was earned. But the detour won’t last forever.
Closing Wednesday above 2091.00 — and not just overlapping it — would have helped to maintain the afternoon rally’s momentum (closing above 2095.00 would have been optimal). Having gained traction Wednesday afternoon, resuming the rally doesn’t require gapping up — but it would be helpful to confirming fresh highs targeting 2110.00 remain in-play.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.