Posts by Rod David
Pre-market Tour (recording & summary)
Did I say 1881.00-1885.00? While its recovery through the open would still be bullish, that’s become a little more difficult since another downleg is now testing 1863.00.
Air pocket pierced.
It’s still early enough that counter-trend sponsorship can’t yet be discounted. And it’s singular direction overnight trending keeps open the door to post-open reversal. Oh, and this is expiration, so, wild card.
Counter-trend sponsorship being a no-show, and not immediately reversing overnight trending, could end the day sharply, sharply lower. The up/down-crash setup is in its crash window. Oh, and wild card.
Details and other markets coverage are discussed in the pre-market Tour recording here.
REMINDER: I’m away today for a 60-90 minute window before returning for the last 60-90 minutes.
The First Trade… It makes perfect sense.
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…
An amazing day. Thursday began by plunging 24 points from its pre-open high to new lows at 1871.00. Being early enough to attract counter-trend sponsorship, a reaction bounced back above prior lows. And then higher. A lot higher. The afternoon’s bias-up signal target was exceeded to test 1927.25, with time for reacting down to 1911.00 through the close.
Overnight action’s new info…
Thursday’s closing dip extended down overnight. A lot lower, attacking 1876.00, which is 5 points within yesterday’s low. And that’s a 105-point round-trip in 20 hours.
If, then…
In a week of least likelihoods, NOT already retracing all of yesterday’s recovery would be surprising. Sarcasm aside, we first began discussing Wednesday morning the potential for a pattern of least likely paths, when Tuesday afternoon’s rally was retraced despite holding up through the open. Bouncing yesterday morning wasn’t unlikely, but testing both bias targets is rare, and trending the afternoon prior to expiration is a least likelihood, too. Expiration is no doubt a catalyst. It is a wild card, less about likelihoods and more about vulnerabilities. Where three-day holiday weekends often inhibit trending or else isolate it to the morning, trending into the close becomes a very real possibility. As with yesterday, the difference should be defined by whether the open is above 1881.00-1885.00, or below it.
First Trade…
Exiting the open at 9:45 under 1881.00-1885.00 would be likely to trend down through the morning, next targeting 1856.00. Exiting the open above 1992.00 would be likely to trend back up.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1928.25 | 1921.00 |
| …would target | 1934.25 | 1927.00 |
| Bias-down: under | 1914.25 | 1907.00 |
| …would target | 1907.00 | 1899.75 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET EXCEEDED | 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
Thursday’s stunning reversal had met a corrective bounce target in the 1910.00 area. Reacting down from 1913.25 to 1904.75 was recovered in time to trigger bias-up targeting 1921.00 — it was extended higher to test 1927.25.
Then it was all reversed. The cash session’s last half-hour dropped to 1911.00. That has drifted lower into the night, now probing under 1904.75 by more than 2 points.
That’s trying to contradict that yesterday’s recovery gained traction for its effort. The bias environment was exited above the noon hour’s high, and the final hour was entered even higher. Friday morning should reward them by trending higher.
Traction, or not, this is expiration. Traction can be negated by gapping down under a prior relevant low — and not immediately rejecting the gap down. That potential to reverse down can’t be dismissed despite Thursday’s recovery.
Monitor overnight Globex trading in the chaRTroom here.
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))
Probing above the 1.0900 bounce limit must be rejected without further delay to maintain near-term potential down to 1.0750.
Gold Feb Contract (GC, ETF: (GLD))
Wednesday’s probe back above Tuesday’s high was rejected by Thursday’s reversal back under Wednesday’s low. Back above 1089.00 would still reinstate the rally, but a deeper pullback is otherwise in-play.
Silver Mar Contract (SI, ETF: (SLV))
Wednesday’s surge above 14.10 was rejected by Thursday’s gap down. Trending down through the morning did fill the gap back to Tuesday’s low, which is still constructive to forming a bottom, but doesn’t qualify as a buy signal.
30-year Treasury Mar Contract (US, ETF: (TLT))
Not-necessarily-stable but not-plunging stocks removed the near-term catalyst for extending the bond rally, which remains intact so long as 157-04 holds as support..
Crude Oil Feb Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
After Wednesday’s inside day ignored stocks plunging, Thursday’s inside day ignored stocks volatility. The decoupling seems glaring.
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
Not greeting Thursday’s EIA report from a position of strength made the pullback likely to exploit all of its room for a pullback to 2.14, which was tested after the news.