Posts by Rod David
The First Trade… Out of its system?
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 bias signal overcame the open’s traction, launching a bounce to the 2044.50 bias-up signal despite having trended down to the 2035.74 bias-down signal. The open’s downtrending was ignored even further as the morning’s no-bias trending exceeded 2044.50 by 10 points. The requirement to retest 2044.50 enabled an afternoon dip that only reached obligatory support at 2046.00 before surging again to test the 2059.50 upper-end of Monday’s final hour range.
Overnight action’s new info…
Despite Wednesday’s still overlapping the 2059.50 upper-end of Monday’s final hour range, fresh highs were probed anyway. But a reaction down from 2062.00 never recovered, and fresh lows into Europe’s opens have extended down to 2047.50.
If, then…
Wednesday’s session colored way outside the lines to a very rare degree, but not at all unprecedented. “Unfinished business below” remains outstanding at 2044.50. Delaying its retest is often compensated by also testing that signal’s timing window print, which was 2039.00. Another 3 ticks lower would target 2032.50 and then 2021.00-2022.00. Some degree of pullback is likely since yesterday’s buyers didn’t gain traction for their effort. But probing higher without gapping up is possible, and then a steep reaction down from a new high close would be probable.
First Trade…
Exiting the open at 9:45 under 2048.75 would be likely to trigger the 2051.75 bias-down signal at 10:15. Exiting the open above 2053.50 would be unlikely to trigger bias-down.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2068.25 | 2061.00 |
| …would target | 2073.50 | 2066.25 |
| Bias-down: under | 2058.00 | 2051.75 |
| …would target | 2051.75 | 2044.50 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET MET | 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)
Wednesday’s open held a test of the morning’s 2035.75 bias-down signal, putting into play an offsetting test of the morning’s 2044.50 bias-up signal. Probing above it during the no-bias environment is called “no-bias trending,” which is doomed to failure. Eventually. Historically.
That didn’t prevent extending higher Wednesday, up to 2060.50. That’s not a little.
No-bias trending isn’t extremely rare. Not retracing no-bias trending the same day is rarer, and anything rare is uncomfortable. So, extending sharply higher is frustrating. And it’s certainly not what the opening action had suggested by trending down productively — before holding a test of the bias-down signal at 10:15.
Context on top of context is telling us the one-day rally is temporary. It neutralized the attraction above back to Monday’s close. The two-day decline preceding it was contained entirely within Friday’s range. And Wednesday’s rally is contained entirely within the two-day decline preceding it.
None of which prevents a fresh high. A retest of Sunday night’s “new Globex trend extreme.” A new trend high close that satisfies Friday’s new trend high close requiring at least one more. But that context on top of context is telling us that neutralizing the attractions above, before completing a correction below, could resolve in a downtrend much more destructive than just a correction.
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… Carried up, up and away.
FOMC fallout resolves in reversal to fresh highs.
The afternoon bias environment contained the FOMC Minutes. The 2053.50 bias-up signal had been tested and retested by 1 point, at both 1:20 and 1:30, triggering noN-bias. Dipping into the news and out of it touched yesterday afternoon’s 2046.00 high as the bias environment began lapsing.
Touching yesterday afternoon’s 2046.00 high produced a bounce to 2057.00-2058.00.
Earlier today in the chaRTroom, I had described the significance of 2057.00 for being a singular representation of resistance.
2057.00 is the 61.8% retracement of the structure at Monday’s late consolidation. The structure contains higher prior lows. The structure’s prior low is 2057.00. And 2057.00 is the 61.8% retracement back to Sunday night’s highs.
While testing resistance above, there remains an attraction below at 2044.50. Being only obligatory support, bouncing from 2046.00 is only an obligatory bounce. It is likely to resolve down. Extending back above Monday’s highs first would set-up a more comprehensive top than we’ve been contemplating.
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 Mar Contract (EC, ETF: (FXE, UUP))
Still hovering above the 1.1345 sell signal, Wednesday firmed back up to the highs, still holding a test of 1.1435 to maintain the topping pattern.
Gold Apr Contract (GC, ETF: (GLD))
Having neutralized both the gap down to Monday’s 1219.50 close and up to Tuesday’s 1229.50 close, Wednesday’s close at 1224.50 is at the pattern’s least predictable point There is no near-term attraction above or below. Closing beyond either 1228.00 above or 1218.00 below would be likely to extend in that direction.
Silver May Contract (SI, ETF: (SLV))
Wednesday’s gap down filled the gap back to Monday’s lower close and then essentially retested Tuesday’s high that had attacked the 15.25 bounce limit. A fresh low testing 14.70 remains likely.
30-year Treasury Jun Contract (US, ETF: (TLT))
Wednesday’s dip fulfilled the minimum bullish scenario of testing “lower prior highs” down to 165-00. By gapping down, the close back to Tuesday’s open is now an attraction above, as Tuesday’s gap up already was. The pullback has room down to 144-22 before threatening a more substantial pullback.
Crude Oil May Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Tuesday’s close did NOT fulfill the eventual third lower close required by Friday’s confirmed breakout, so its lower attraction remains outstanding. Gapping up Wednesday created another attraction below, in addition to targeting 34.25 and 31.85: fill the gap back down to Tuesday’s close. Back under 36.95 would signal the decline has resumed.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
Gapping down to test 1.90-1.95 all day Wednesday is not constructive to Tuesday’s intraday dip that held 1.95 support. And it is not greeting Thursday’s EIA report from a position of strength. Immediately recovering above 1.95 would likely compensate for the delay by quickly surging to fresh highs.