Posts by Rod David
The First Trade… Volatile.
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…
Gapping up Wednesday remained aloft through the open, not inverting the overnight rally. That didn’t prevent reversing down just minutes later. The reversal extended down relentlessly and substantially, turning a test of 1946.50 into a plunge to 1878.00. That’s new lows, which probed under Monday’s 1892.50 prior low, which had stopped short of its 1881.00 target. Actively bearish WedEX triggered.
Overnight action’s new info…
China’s renewed weakness triggered a brief dip to new lows at 1874.50. it was recovered as quickly as it had developed, and continued improving. Europe’s opens were greeted optimistically attacking 1898.00. That was reversed back down to down to within 1 tick of 1874.50, before bouncing back to 1891.00..
If, then…
There’s nothing predictive about ranging choppily overnight without extending the decline. Ranging choppily intraday wouldn’t be predictive, either. The pattern remains vulnerable to extending down sharply, with the wild card of last-minute expiration jockeying.
First Trade…
Exiting the open at 9:45 above 1885.00 would be unlikely to trigger the 1880.25 bias-down signal at 10:15. Exiting the open above 1993.50 would be likely to trigger the 1891.75 bias-up signal.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1898.75 | 1891.75 |
| …would target | 1906.00 | 1899.25 |
| Bias-down: under | 1887.00 | 1880.25 |
| …would target | 1882.00 | 1875.00 |
| Signal status: TESTED BOTH BIAS-DOWN PARAMETERS, LATE INVALIDATION | 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)
The retest of Sunday’s 1993.50 low had targeted 1881.00. Monday’s retest of it by 1 point launched a detour to 1946.50. But 1881.00 was tested Wednesday down to 1878.00. And a late-afternoon bounce to 1895.50 was retraced back down to 1881.00
So, now what?
The decline is especially vulnerable to dropping dozens of points more, whether overnight or at Thursday’s open. Bouncing first would likely be temporary, as there is “unfinished business below” at the low’s oversold RSIs. Bouncing first Thursday is possible, but probably not gapping up enough to negate Wednesday’s bearish WedEX isn’t likely.
Details and other markets coverage are discussed in the post-market Wrap recording here. (Or scroll down in the blog.)
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))
Gapping down Wednesday was retraced back up toward 1.090 like Tuesday’s gap down. That’s not the bounce limit, but chipping away at its resistance may begin undermining the downside attraction to 1.0750.
Gold Feb Contract (GC, ETF: (GLD))
Wednesday’s gap down under Tuesday’s test of 1084.00 support did not extend down before bouncing back above Tuesday’s 1089.00 high. Closing above it would have signaled momentum reversing up, but the high was still being tested. Extending higher Thursday without delay overnight and/or post-open would be credible for extending higher intraday.
Silver Mar Contract (SI, ETF: (SLV))
Tuesday’s gap down had not trended down intraday, keeping alive the potential for rejecting the gap by reversing up immediately, which Wednesday did on the way up to 14.10. A second consecutive higher close above 14-10. Thursday would signal the trend is reversing up.
30-year Treasury Mar Contract (US, ETF: (TLT))
Gapping down Wednesday still recovered in another flight-to-safety. Potential up to 158-10 and higher was exceeded significantly to 159-04 while producing a second consecutive higher close confirming Tuesday’s breakout. Upside momentum remains intact and next targeting 160-08 so long as 158-06 now holds as support.
Crude Oil Feb Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Gapping up again was reversed back down post-open Wednesday. Interestingly, stocks continued falling — in fact, plunging — while Crude Oil ranged narrowly sideways at or above Tuesday’s close. Are they decoupling? Must a Crude Oil bounce trigger more than a blip-up in stocks? Could the next Crude Oil upleg be from saber rattling, and could that overcome the supply issues — which have been substantially discounted?
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
Firming Wednesday did not recover through 2.32 resistance ahead of Thursday’s EIA report. Holding any gains after the report would be likely anyway to extend higher intraday.
Pre-close View… Trickle down theory.
Relentless slide has returned to the lows.
Yesterday afternoon’s rally had gained traction, earning it a probe of higher highs. Overnight action did extend substantially higher. If that had sufficed, then the open would have inverted the rally signal.
It didn’t.
A dip did develop after the open, but its recovery was likely because the open had held up. Uh, no. The dip has extended and extended. And extended.
Last night’s 1946.50 high — so close to the next higher objective of 1948.00 — has reversed down steadily and relentlessly. And now also completely, as Monday’s low is being retested to and 3 points through its 1881.00-1885.00 objective.
Any lower into the final hour would be vulnerable to falling sharply into an air pocket 25-40 points lower. This is testing the summer’s prior lows, obligatory support that must influence a bounce now to influence one at all.