Posts by Rod David
The First Trade… It’s beginning to look a lot like Christmas.
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…
Plunging about 20 points to 1893.50 at Sunday night’s open had recovered enough to gap up Monday and touch 1929.00. Selling resumed immediately, extending down through the noon hour. The slide ended abruptly after the noon hour upon only barely piercing the overnight low by 1 point. The noon hour’s 1905.50 low was recovered by just enough just in time to prevent sellers from gaining traction. Sellers also failed to gain traction from a steep drop through the 3:10-3:20 timing window that avoided fresh lows. A surge to 1923.00 ended the day unchanged around 1914.00.
Overnight action’s new info…
Monday’s late dip back to unchanged eventually extended down another 14 points to 1899.00. Sympathy for Chinese stocks falling was leveraged by concern for Crude Oil that was probing fresh lows. This morning’s bias-down target happens to be 1899.00, and its reaction extended up to 1912.00 through Europe’s opens. Crude Oil reversed up after a terrorist event in Istanbul triggered a surge that probed yesterday’s opening high to attack 1931.00.
If, then…
Monday afternoon’s low was on the precipice of the precipice. Retesting Sunday night’s low had room below for another 11 points down to 1881.00. The afternoon’s surge’s appearance was very timely, as any lower any later would have pierced an air pocket below. And now another precipice overnight has been recovered from 1899.00 to probe 2 points above Monday morning’s 1929.00 high. It should be noted that Crude Oil is the overnight recovery’s fickle catalyst. Already being oversold from China helped, and from remaining stable through Europe’s opens. While nothing about the pattern suggests it is becoming a durable bottom, sudden pre-expiration detours can have a dizzying effect. Above 1933.50 could extend to 1948.00 or even to 1975.00 — briefly, and temporarily, but steeply — before another downleg can gain traction. Otherwise, stomping immediately Tuesday on overnight optimism could resume the work of Monday morning’s sell-off.
First Trade…
Exiting the open at 9:45 above 1929.00 would be likely also to trigger the 1927.25 bias-up signal at 10:15. Exiting the open under 1921.00 would be unlikely to trigger bias-up.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1933.50 | 1927.25 |
| …would target | 1940.50 | 1933.50 |
| Bias-down: under | 1913.50 | 1906.50 |
| …would target | 1906.25 | 1899.00 |
| Signal status: noN-BIAS, TESTED BOTH BIAS-UP PARAMETERS | 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 18-point bounce from retesting overnight lows had held its 1910.00 resistance. It had retraced down to 1897.00 — 4-1/2 points back to the low. Sellers had not gained traction since the bias environment was exited within the noon hour’s range, and the final hour was entered there, too.
But that didn’t precluded extending down. And it didn’t enable a bounce. A big, humongous bounce.
Yet, that’s what followed. The timing was not appropriate for strong-handed sponsorship, but a 26-point rally touched 1923.00. That’s positive territory. Or, it was. A reaction down into the close ended the day flat.
It seems like success for a bottoming attempt — probe a new low, and recover its retest. But timing is everything, timing like origins and closes, and they suggest the decline has chipped away at support more than formed a base.
Nevertheless, neither buyers nor sellers gained traction for their efforts. So, gapping open either way Tuesday could be credible for extending in that direction intraday — whether above 1933.50 or 1943.50, or under 1899.00 or 1894.50.
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… Detour, or die.
Overnight low’s retest is trying to hold.
The 1893.50 overnight low was retested all the way down to… 1982.50. Not quite the potential to 1881.00 of the pattern I’ve been tracking.
Nevertheless, its reaction just touched 1910.00. That tests the resistance of higher prior lows around 1906.00, and their prior high. Any higher upon entering the final hour could trigger a short-squeeze.
If the resolution is to be bearish, and if the anti-optimism conditioning classes have finally matriculated their last student, then 1910.00 will hold. More so, back under 1903.50 and 1899.00 will gather pace at a steeper slope as the decline announces it remains alive and very well.
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 Friday’s high Sunday night was retraced back into Friday’s range Monday, but not reversed down, although that remains the likely resolution.
Gold Feb Contract (GC, ETF: (GLD))
Overnight strength was retraced back into Friday’s range as Friday’s pullback low remains likely to be retested as deeply as 1091.00 before extending the rally.
Silver Mar Contract (SI, ETF: (SLV))
Gapping up Monday was reversed entirely to probe back under Friday’s late plunge low, which isn’t necessarily bearish, and makes a recovery above 14.10 that much more bullish.
30-year Treasury Mar Contract (US, ETF: (TLT))
Fresh highs overnight fulfilled the 156-30/157-04 bounce limit before reversing to gap down at Monday’s open. Shallow follow-through was recovered only enough to fill the gap back to Friday’s close. That cautious optimism near the upside attraction makes a retest likely of the overnight highs.
Crude Oil Feb Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Reacting down from Friday’s 33.55 bounce limit test extended sharply lower Monday to fresh lows attacking the next lower support at 30.80. Closing under 31.35 keeps alive the momentum down.
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
Friday’s breakout wasn’t confirmed by a second consecutive higher close Monday. But gapping down created a gap back to Friday’s ~2.48 close that must be filled eventually, making the dip likely to be recovered. The pullback has room to 2.31 before suggesting anything deeper underway. Closing above 2.44 would be likely to extend the rally.