Posts by Rod David
Post-open Review… Delayed gratification.
Is yesterday’s high finally being probed?
Not gapping down steeply kept alive the likelihood for rewarding yesterday’s rally by probing yesterday’s highs this morning. That’s difficult to believe when the pre-open surge to 1874.00 is reversing down to 1841.00 into and out of the close.
Just a little hiccup.
Testing the 1846.00 bias-down signal held through 10:15 to avoid triggering. That would put into play an offsetting test of the 1865.00 bias-up signal. But the bias-up signal was being tested at 10:15 to invoke the grace period.
And it was overlapped at 10:30 to trigger noN-bias.
Its 1869.25 bias-up target was met anyway. And it has been probed up to 1873.75. The reward due yesterday afternoon’s sponsorship (i.e. control of this morning’s bias environment) suggests that probing above yesterday’s highs will persist a little longer.
Pre-market Tour (recording & summary)
This morning’s First Trade preliminary levels are essentially moot. That’s because of a steep rally from the range that was centering on 1846.00. ECB chief Mario Draghi hinted at a future easing, triggering a surge to 1874.00. That has now reacted down 20 points to 1854.00, still in positive territory, suggesting that this morning will be spent probing above yesterday’s highs to reward the recovery’s sponsorship.
Details and other markets coverage are discussed in the pre-market Tour recording here.
The First Trade… Hunkering down.
Proper context can start the day with a solid win and make all the difference.
CHARTROOM LINK <<==click here
(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Wednesday’s record-challenging gap down and extension to new lows had lost sponsorship at the 1804.25 noon hour low. The window had isolated a retest of the 1815.00 October 2014 “V” bottom. The balance of the afternoon rallied sharply to probe Friday and Tuesday’s “higher prior lows” up to 1869.25. The last half-hour settled back down to 1849.00, but the rally had already gained traction for its effort.
Overnight action’s new info…
The recovery immediately resumed and eventually extended to a fresh high at 1876.00, filling the gap back to Tuesday’s close. It was retraced entirely by midnight, on the way down to 1836.25 ahead of Europe’s opens. Choppy ranging since then has been narrowing around 1846.00.
If, then…
Durable bottom? No. Trading bottom? Possibly. Invulnerable bottom? No. DeMark is calling yesterday’s selling intensity on par with the starts of 5-8% corrective bounces. Fair enough, but I would add 2-1/2 points: First, that it’s not a straight-line there, and second, Wednesday afternoon’s bounce already covered 2/3rds of the 5% objective. A corollary to those points is that correcting so much so quickly — during the same session as the alleged low — actually undermines the low instead of reinforcing it. In fact, half of yesterday’s recovery is already retraced overnight. Don’t forget that my active templates suggested that a capitulation was likely to span multiple sessions, which is not yet the case. Rising enough early enough would allow extending the bounce to reward the recovery for traction its gained. But fresh lows pre-open won’t have much time to recover before that traction finds itself inverting, and new lows are in-play.
First Trade…
Exiting the open at 9:45 under 1843.25 would be likely to trigger the 1846.00 bias-down signal at 10:15. Exiting the open under 1833.00 would be unlikely to recover the 1840.00 bias-down target in time to avoid renewing the bias-down signal, next targeting 1829.25. Exiting the open above 1853.25 would be unlikely to trigger bias-down.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1872.50 | 1865.00 |
| …would target | 1876.50 | 1869.25 |
| Bias-down: under | 1853.25 | 1846.00 |
| …would target | 1847.50 | 1840.00 |
| Signal status: noN-BIAS, TESTED BOTH BIAS SIGNALS | 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)
Is it, or isn’t it? First of all, what’s the “it” — substantial corrective bounce, or durable bottom? Corrective bounce, maybe. But two “V” bottoms do not a durable bottom make.
Wednesday’s 2004.00 low reacted up throughout the afternoon tested 1869.00. Does the relentless feel of the afternoon rally make the bottoming attempt any more credible than a shallow bounce? The low’s RSIs diverged positively, while the next lower objective was neutralized. Overbought RSIs left outstanding at the high help to ensure its retest. And traction gained by the rally should be rewarded Thursday morning.
But Wreversal Wednesday? Durable bottom? That’s not so reliable considering the rally probed only temporarily back above Tuesday’s low without holding it. Strong-handed buying would have closed above 1865.00-1868.00 having probed it, or else patiently avoided it and reserved buying pressure.
Traction gained Wednesday afternoon can be rewarded by probing higher Thursday morning, while remaining vulnerable to resuming the decline. Probing higher after gapping up to and through 1881.00-1885.00 would be less likely to resume the decline soon. Otherwise, already rejecting the final hour’s surge above 1840.00 back under 1834.00 would be a big step to resuming the decline already.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.