Posts by Rod David
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))
Fulfilling the pattern’s minimum objective at Tuesday’s new high close relieved the pattern of any higher requirements. That didn’t qualify as signaling a reversal, but price did react down Wednesday, testing its 1.1200 pullback limit.
Gold Feb Contract (GC, ETF: (GLD))
Overnight weakness was eventually recovered Wednesday, but the 1203.00 target wasn’t met. Its delay does suggest it might be probed, but closing above it would still need a second consecutive higher close to confirm any higher objective in-play.
Silver Mar Contract (SI, ETF: (SLV))
Overnight weakness was recovered essentially to unchanged Wednesday, but still not probing a fresh high that the pattern suggests will develop before a durable downleg.
30-year Treasury Mar Contract (US, ETF: (TLT))
A test of the 165-08/165-12 pullback limit’s lower-end Wednesday resolved up. And up, and up. New highs were probed aggressively up to 167-03 as the rally remained entirely intact.
Crude Oil Mar Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
The downleg targeting new lows is in its denial stage, as choppiness expands upon testing the prior low. A two-handle surge intraday was erased entirely, still likely to extend down.
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Gapping down under 2.07 Wednesday and extending to test 2.02 was the opposite of initial strength which would have signaled a rally. Thursday’s EIA report isn’t being greeted from a position of strength, but also not from weakness that might require a negative reaction or undermine a favorable reaction.
Look ahead: Economic Calendar – for Thu Feb 11, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Fed Chair Yellen completes her Humphrey Hawkins testimony Thursday in the Senate. Often, the market will discount any reaction it had the day before. But that effect is short-lived once the embargo is lifted on her opening remarks.
Jobless Claims
8:30 AM ET
Bloomberg Consumer Comfort Index
9:45 AM ET
**Janet Yellen Speaks
10:00 AM ET
EIA Natural Gas Report
10:30 AM ET
*30-Yr Bond Auction
1:00 PM ET
Fed Balance Sheet
4:30 PM ET
Money Supply
4:30 PM ET
Afternoon Bias
| WED afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 1873.50 | 1867.75 |
| …would target | 1878.25 | 1872.75 |
| Bias-down: under | 1861.75 | 1856.50 |
| …would target | 1856.00 | 1850.50 |
| Signal status: LATE NO-BIAS, TESTED BIAS-UP SIGNAL | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
1. At 1:20, 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 1:20 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 1:20 would invoke a grace period through 1:30 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 1:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.
Post-open Review… Well-managed surprise.
Yellen’s pre-open release kept something on the table.
It wasn’t just scraps, but it’s now gone, nonetheless.
The pre-open test of 1857.25 support was retested post-open down to the 1855.50 bias-up signal. Its support held, and the 1861.25 bias-up target was exceeded through 10:15 to renew the bias-up signal.
Friday’s “higher prior lows” around 1868.00 had not been tested post-open. But now overnight highs have been exceeded up to 1877.75.
Several fibonacci extensions clustered there to trigger my warning in the chaRTroom that a pullback had become likely. It had no particular expectations, whether shallow or deep, but it has proved to be the latter. Its 16-point reaction is testing 1859.40.
Meanwhile, the pre-open cooler from Yellen that was bullish from a contrarian perspective has been fulfilled. Even the gaps back up to Friday’s 1873.25 and 1875.50 closes have been filled.
Extending higher to 1881.00 and 1888.00 is not assured, but at least a bounce to 1868.00 is somewhat likely. Exiting the bias environment at 11:30 back under its 1861.25 bias-up target would undermine the upside momentum. Under the 1855.50 bias-up signal could reverse it down.
In case you haven’t yet grabbed it off the blog, here’s the link to this morning’s pre-market Tour.
Pre-market Tour (recording & summary)
For only the second time that I can recall, Yellen lifted the embargo on this morning’s 10:00am opening remarks much earlier. Last time was at 8:30am, causing the market to scramble. This time was much earlier, in time to prevent the overnight rally’s latest breakout from extending. In fact, fresh highs at 1872.00 were already retracing, and then plunged to 1859.00. That’s been retested down to 1856.00.
Did that last dip subdue optimism, like yesterday’s last reaction down, which was bullish from a contrarian perspective? We’ll know soon, especially if 1857.25 holds as support through the open. Otherwise, there’s room down to yesterday’s 1856.50 “lower prior highs” and a little lower before reversing momentum back down more durably.
Details and other markets coverage are discussed in the pre-market Tour recording here.