Posts by Rod David
The First Trade… Hang in there, it’s Friday!
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 night’s recovery attempt up to 2104.00 had been retraced to greet Thursday’s open unchanged around 2096.00. The reversal extended through the open and through the afternoon to attack 2082.00. The last 60-90 minutes ranged choppily sideways ahead of post-close earnings from GOOG and MSFT. Sellers gained no traction for their efforts.
Overnight action’s new info…
Plunging in reaction to earnings extended down to test 2078.00. Its reaction up extended higher relentlessly, probing the late-afternoon 2087.50 resistance up to 2089.00. Europe’s opens began a reversal that extended to 2079.00, which — like the post-close plunge — has been retraced back up to 2087.50.
If, then…
The chart reminds me of the iconic cat poster “Hang in there, weekend’s coming!” The drop from Wednesday afternoon’s doomed high is dangling at support — and there’s a bit of a drop below. There’s also a way up. Having trended down into Thursday’s close, gapping up Friday above the afternoon’s 2090.25 high could form a “session-long rally” setup. And a retest of last year’s last relative highs at 2110.00 would not be difficult to reach. Testing 2090.25 at or just before the open would require either forming the setup, or else duplicating yesterday’s decline. And that would target 2076.00 if not also 2067.00.
First Trade…
Exiting the open at 9:45 Exiting the open under 2079.00 would be likely to trigger the 2081.75 bias-down signal at 10:15. Exiting the open above 2083.50 would be unlikely to trigger bias-down. Exiting the open above 2093.75 would be likely to trigger the 2091.00 bias-up signal.
Post-market Wrap (recording & summary)
The 3:10-3:20 window certainly didn’t trend down to fresh lows. The 2082.25 low was attacked, but not probed. The session’s last 60-90 minutes only ranged choppily sideways ahead of post-close earnings from GOOG and MSFT.
The cash session’s last minute spiked up to 2088.75 and then back down to the afternoon’s 2082.25 low. Breaking lower after the futures close plunged to 2078.75.
Regardless of the post-close plunge, sellers gained no traction Thursday, and no unfinished business below as left outstanding. Unlike the prior two sessions, Friday’s open need not gap up to launch a rally. So, gapping down anyway would be doubly-bearish.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2097.00 | 2091.00 |
| …would target | 2102.25 | 2096.25 |
| Bias-down: under | 2087.75 | 2081.75 |
| …would target | 2081.50 | 2075.50 |
| Signal status: NO-BIAS, TESTED BIAS-DOWN SIGNAL | 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.
Pre-close View… War of a traction.
Sellers could still gain traction.
The bias environment’s low fulfilled this afternoon’s 2082.75 bias-down target, which was pierced by 2 ticks. Its reaction up probed back above the bias environment’s 2085.25 low by 2 points, which prevented sellers from gaining traction.
So far. The door is open to a short-squeeze. Signaling a squeeze required entering the final hour above a prior high, not just probing above a higher prior low.
Back under 2084.00 quickly could trend down to fresh session lows through the 3:10-3:20 timing window. And that would do by proxy what the final hour entry avoided. Sellers would gain traction, and tomorrow morning would likely trend down further.
There is no unfinished business below, so the only reason not to rally is because a deeper downleg is underway.
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 up Thursday peaked upon filling the gap back to the high’s last close at 1.1415. This was above Wednesday’s high that had held a test of “higher prior lows,” and closing any higher would have put into play new highs. But Mario Draghi had the mic. And without much further delay, the gap up was retraced into negative territory under 1.1310. No buy signal would be credible before probing fresh lows.
Gold Jun Contract (GC, ETF: (GLD))
Gapping up sharply to fresh highs was soon reversed even more sharply to probe back under Wednesday’s lows. Closing under 1248.00 would trigger a downleg targeting 1222.00 that could launch the pattern’s most substantial rally, yet.
Silver May Contract (SI, ETF: (SLV))
Thursday’s gap up to much higher fresh highs was nevertheless reversed back down sharply into negative territory. This doesn’t affect the confirmed breakout that still requires at least one eventual higher close.
30-year Treasury Jun Contract (US, ETF: (TLT))
Failing to hold the 164-12 pullback limit’s retest Wednesday broke sharply lower, and extended even deeper Thursday morning. The second consecutive lower close now requires an eventual third lower close. Bounces should meanwhile hold 163-12 if tested.
Crude Oil Jun Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Closing Wednesday above last week’s highs could be confirmed by Thursday closing higher, but trending back down under prior highs misses that opportunity. Almost any initial weakness Friday would be credible for extending down intraday.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
Thursday’s EIA report was greeted from a position of strength, being a pullback in an uptrend of higher highs and higher lows. But that didn’t ensure any meaningful reaction, as the session ranged only narrowly.