Posts by Rod David
The First Trade… The chop before the storm.
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…
An overnight rally to 2098.00 had pulled back just enough to avoid gapping up at Wednesday’s open. That created an objective at 2088.25, which was attacked to within 5 ticks before OPEC’s headlines triggered a surge to fresh highs above 2100.00. We knew to expect the rally’s failure since it was no-bias trending, and since Tuesday’s buyers had not gained traction. Waiting until 2105.25 only exacerbated the failure, which almost 10 points into the close.
Overnight action’s new info…
A slightly lower low at 2095.00 was recovered 2104.00 into midnight. That steady recovery has been replaced by a choppy decline back to yesterday’s 2096.50 cash session close. Its reaction up is now testing 2100.00. The ECB monetary decision and Draghi’s always-volatile press conference still lie ahead.
If, then…
The retest of last year’s last relative high at 2110.00 is very close. More than touching it is likely before reacting down durably, but only attacking it could react down substantially. Yesterday’s no-bias trending is the work of overly-optimistic weak hands, which appears more often before turning points. If yesterday’s late plunge was a warning shot, then exiting today’s open any lower could target yesterday morning’s “unfinished business below” at 2088.25 and lower.
First Trade…
Exiting the open at 9:45 above 2103.50 would be likely to trigger the 2101.00 bias-up signal at 10:15. Exiting the open under 2098.50 would be unlikely to trigger bias-up. Exiting the open at 9:45 under 2088.25 would be likely to trigger the 2093.00 bias-down signal at 10:15.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2107.00 | 2101.00 |
| …would target | 2113.25 | 2107.25 |
| Bias-down: under | 2099.00 | 2093.00 |
| …would target | 2093.50 | 2087.50 |
| Signal status: LATE BIAS-DOWN | 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)
Reacting down from the 2105.25 high fell back to and through 2101.00 and 2099.75 to test the open’s 2096.25 highs by 3 ticks. It was a singular downleg, originating from the high print, so it’s probably just a warning shot. Reacting down from the high’s retest would be more capable of extending down deeply.
Unfinished business below was left outstanding at 2088.25. Testing it first, before retesting the high, would not prevent retesting the high later. And it would be easier to extend higher. So the more bullish scenario is probably down, first.
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… No-bias trending.
Spoiler alert: I’ve buried the lede.
This afternoon’s 2101.00 bias-up signal didn’t trigger. And it wasn’t exceeded through 1:30 to invalidate the no-bias environment. But it was broken anyway, and price has extended up to 2104.50. This is “no-bias trending,” and it requires being retraced to at least the 2101.00 bias-up signal.
There’s no timing requirement to the retracement, which can happen at any time. But the ongoing series of higher highs and higher lows is trending, so we know that the first reaction down won’t be THE reaction down, but a warning shot. And even that warning shot could be absorbed for higher highs.
Meanwhile, consider the main implication of probing higher highs, which is the long-awaited retest of last year’s last relative high is now being fulfilled. Now consider the context of neutralizing the upside objective, which is being done by a leg that is doomed to failure.
That attraction above is neutralized at 2110.00, another 5 points higher. Not yet neutralizing the attraction below at 2101.00 would be very vulnerable to reversing down sharply. So, even the most bullish scenario should test 2101.00 today or 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))
Only attacking the gap back to 1.1415 before resuming the decline isn’t necessarily premature. But Wednesday’s drop must still be confirmed before relying it to extend. And resuming the corrective bounce first would more likely probe prior highs to compensate for the delay.
Gold Jun Contract (GC, ETF: (GLD))
Tuesday night’s high filled the gap back to 1259.00 before Wednesday’s open dipped back into Tuesday’s intraday range. The decline didn’t yet resume, but it may have been supported only by Silver’s simultaneous strength.
Silver May Contract (SI, ETF: (SLV))
Extending higher overnight produced a gap up Wednesday that was maintained to confirm Tuesday’s breakout above 16.85. Pullbacks have room down to 16.70 while maintaining the next higher target at 18.80.
30-year Treasury Jun Contract (US, ETF: (TLT))
Initially rallying Wednesday was blind-sided by a broader market recovery. The 164-12/164-20 pullback limit that could barely be tested last week, has now been probed twice this week, this time targeting 164-06. But a close above 165-06 is still needed to signal the pullback has ended and the trend has reversed up.
Crude Oil Jun Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Gapping down Wednesday had reacted up to fill the gap back to Tuesday’s close, when OPEC rumors triggered a surge that extended through the afternoon, and through prior highs. None of which changes Friday’s confirmed breakout that requires at least one more lower close.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
Wednesday’s probe of Tuesday’s 2.10 high by 3 cents was reversed back under Tuesday’s high. Closing under 2.05 would signal a deeper corrective dip underway. Otherwise, the rally’s momentum remains intact and targeting 2.20-2.25 .