Posts by Rod David
Post-market Wrap (recording & summary)
Retesting the 2044.25 overnight high Monday afternoon created an “outside day.” Haven’t seen that in awhile. It’s otherwise meaningless, except to make remarkable an otherwise unremarkable range.
Actually, more could be said for Monday, which produced a new trend high close. That fulfills the minimum requirement established by Friday’s new trend high close — that there be an eventual higher close. Fulfilling it so quickly is a little useless, since it neutralized the setup’s predictive value.
Actually, the neutralized upside attraction now updates the reversal template with one less impediment. A reversal isn’t required, and it can be overcome, but two consecutive days of unremarkable (mostly unremarkable) does suggest the rally’s momentum may be lapsing.
Actually, it may be only the recent expiration sponsorship that is lapsing. The rally can resume by gapping up Tuesday, since Monday afternoon’s buyers gained no traction for their efforts. Or, an immediately break lower could find buyers at a lower level to sponsor the next rally leg.
Multiple sessions of relatively narrow ranging tend not to resolve immediately. In other words, trending tends to follow a false break in the opposite direction. So, reversing down would more likely begin by failing an aggressive probe of fresh highs, 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… Poking holes.
Retest of overnight high could cut either way — sharply.
This afternoon’s 2041.50 bias-up signal was not touched in time to trigger, or even to invoke the grace period. But the resulting no-bias environment was invalidated by surging through 2041.50 through the bottom off the hour.
The bias environment extended only to 2043.00 and the bias environment exit has pierced the 2044.25 overnight high by 1 tick. Approaching 2044.25 pessimistically is potentially bullish from a contrarian perspective.
Entering the final hour back under 2041.50 would suggest otherwise. Unfinished business below at 2030.75 remains outstanding from this morning’s offsetting test of the bias-up signal. It could attract price back down today. Or, the lower attraction could lie patiently in wait to spoil a rally effort.
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))
Monday’s slow and shallow slide doesn’t complete a top, but it might launch an aggressive dip Tuesday before its recovery Wednesday or Thursday can begin completing a top. The alternative to dipping aggressively is to resume the rally, but likely only by surging — any muted strength would be less likely to extend.
Gold Apr Contract (GC, ETF: (GLD))
Breaking Friday under 1262.00 to test 1250.20 support was not bullish, which Monday’s drop to 1242.00 proved. Closing under 1250.20 now allows no consideration for a buy signal before first testing the 1216.50-1223.00 target area.
Silver May Contract (SI, ETF: (SLV))
Gapping up to 15.70 and extending to fresh highs intraday without closing above prior highs last week was bearish. Initial weakness Monday suggested as much, although the session mostly only ranged around unchanged.
30-year Treasury Jun Contract (US, ETF: (TLT))
My concerns about Thursday and Friday’s “ineffectual optimism” were confirmed by Monday’s gap down that slid sharply intraday to retest the prior trading range. Monday’s 161-20 low would have been bullish support if tested before trying ineffectually to break high. Instead, it is now likely to be broken on the way to fresh lows at 160-28.
Crude Oil May Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Sunday night’s weakness was recovered in time for Monday to range somewhat narrowly around unchanged. Friday’s gap open above prior highs at 42.00-42.30 (basis May, 40.70-41.00 basis Apr) should be retested to form a durable top.
Natural Gas Apr Contract (NG, ETF: (UNG, UNL))
Gapping down Monday from Friday’s fresh high close now leaves “unfinished business above” that should help to attract price higher and resume the rally targeting 1.99, so long as the pullback holds its test of 1.85.
Mid-day Update… Its best offense was a strong defense.
Bullish WedEX repeats Friday afternoon’s pattern.
Friday afternoon had been entered in a slide from the morning’s recovery. Like its morning’s recovery, Friday retraced the entire slide into the cash session close.
This morning’s opening surge was productive, testing the 2041.50 bias-up signal. But its reaction down slid to 2032.50. Like Friday afternoon’s slide, it was all recovered — at least, to within 1 tick of the morning’s high.
Bullish WedEX doesn’t necessarily produce a rally, not when it’s called on to absorb downdrafts. Having said that, absorbing a downdraft on Friday afternoon usually produces an aggressive rally on Monday morning.
What else about Friday will be duplicated today? Notice that its unremarkable range has only been pierced on either end, by another otherwise unremarkable range. Having failed this morning’s attempts to break the range, the afternoon isn’t required to do anything new. By that same token, trending this afternoon — especially if begun after the bias environment begins lapsing — could extend through the close.
Look ahead: Economic Calendar – for Tue Mar 22, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Another noon hour Fed speaker on Tuesday has potential to influence price action. Not the overnight speaker for his timing, but for his track record. No econ report has either a high-profile or a reliable track record for influencing price action.
*James Bullard Speaks
MON 8:30 PM ET
Redbook
8:55 AM ET
FHFA House Price Index
9:00 AM ET
PMI Manufacturing Index Flash
9:45 AM ET
Richmond Fed Manufacturing Index
10:00 AM ET
4-Week Bill Auction
11:30 AM ET
*Charles Evans Speaks
12:30 PM ET