Posts by Rod David
The First Trade… But wait, there’s more.
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…
Recovering an overnight dip down to 1928.00 enabled a relatively flat open around 1946.00. Extending 10 points higher probed Friday’s range up to 1956.00 Despite starting a little late to be durable, the rest of Friday’s range could have been retraced, too. Never mind that, an afternoon slide fell back down to overnight lows, gaining traction for its effort.
Overnight action’s new info…
Lower lows soon came within 3 ticks of critical support at 1920.00. But the balance of the night has rallied, eventually testing yesterday’s open around 1946.00. Its reaction down has recovered to momentarily attack 1948.00.
If, then…
I gave yesterday morning’s late rally too much credibility for being able to extend through 1952.00-1953.00. The afternoon slide earned more credibility than I had given it, not only fulfilling its potential to retest 1933.00, but then also retesting 1930.00. Now the overnight rally is threatening that credibility. Much can happen in this pattern before the open. But just gapping up above 1943.00 could negate rewarding yesterday afternoon’s sellers with control of this morning’s bias environment. Gapping up above 1951.00 would be the optimal rejection, targeting a retest of 1969.00.
First Trade…
Exiting the open at 9:45 above 1948.00 would be likely also to exceed the 1946.00 bias-up target at 10:15 to renew the bias-up signal. Exiting the open above 1944.00 would be likely to trigger the 1940.25 bias-up signal at 10:15. Exiting the open under 1937.75 would be unlikely to trigger bias-up.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1943.75 | 1940.25 |
| …would target | 1949.50 | 1946.00 |
| Bias-down: under | 1932.00 | 1928.50 |
| …would target | 1926.75 | 1923.25 |
| Signal status: BIAS-UP, BIAS-UP 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)
Monday afternoon’s decline gained traction for its effort. The bias environment was exited under the noon hour’s low, and the final hour was entered under the bias environment’s low. Tuesday morning should reward sellers with probing lower — and not only momentarily. That reward can be delayed until the afternoon.
None of Friday’s range requires being tested, no matter how much likelier that had become Monday morning. But it was a mistake to give the late-morning rally too much credibility. Not actually a mistake, since it held the bias-up signal’s resistance. But the late-morning rally did not earn any reward.
Negating Monday afternoon’s drop would all but require gapping up Tuesday above Monday afternoon’s 1951.00 bias environment high. Gapping up above the afternoon’s 1943.00 bias environment exit would be a contender.
It’s entirely possible that the retest of Feb 1’s high has completed, and that the trend is reversing down. Momentum shouldn’t delay being obvious, unless any further dipping is only delaying a retest of Friday’s highs.
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… Coming home to roost.
Delaying a shallow pullback has led to a deeper one.
This morning’s late rally to fresh highs during a no-bias environment was entirely acceptable, since it held a test of the 1953.00 bias-up signal. But the late rally’s origin interrupted a slingshot pattern that usually probes slightly lower before snapping back sharply in the opposite direction.
This morning’s pattern snapped up sharply, without any slingshot. So, we knew it was doomed to failure. But having tested the 1952.00-1953.00 resistance, I gave it credibility for testing Friday’s 1968.75 pre-open high, too.
Nope. Reacting down from 1956.25 through the noon hour had at least attacked the afternoon’s 1948.00 bias-down signal. But bias-down didn’t trigger. Not at 1:20, and neither did fresh lows invalidate no-bias at 1:30. But the slide resumed and now 1933.00 is being attacked.
Oversold RSIs prevent a durable recovery from here. So does a greater potential to retest 1930.00 intraday. Otherwise, no buy signal can trigger under 1941.00.
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))
The ongoing decline started the week by gapping down and extending lower. Testing 1.0865 at its low may allow at least a corrective bounce to test 1.1000, since that’s a 61.8% retracement of the Dec-Jan consolidation. Extending lower anyway would be vulnerable to sliding more sharply.
Gold Apr Contract (GC, ETF: (GLD))
Gapping up Monday to 1227.50 extended through the buy signal but stopped short of reaching its 1242.00 objective, whose recovery would all but target a retest of the 1265.00 prior high.
Silver May Contract (SI, ETF: (SLV))
Flat-to-lower ranging Monday didn’t help to end the extended reaction down, which must still recover 15.15 to suggest a retest of the recent highs is underway.
30-year Treasury Jun Contract (US, ETF: (TLT))
Sunday night’s probing above Friday’s gap-down highs weren’t maintained into Monday’s open, suggesting a narrowly ranging session. Gapping up Tuesday would still qualify for rejecting the dip and resuming the recovery.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Dipping overnight to test 32.50 held the signal but only bounced back into the range, so closing under 32.50 would still qualify for resuming the decline targeting a retest of the lows.
Natural Gas Apr Contract (NG, ETF: (UNG, UNL))
Like Friday, Monday avoided gapping up and forming an Island Reversal pattern, instead gapping down and extending lower. The 3-session setup of unconfirmed breaks suggests that Tuesday won’t confirm Monday’s break as being durable.