Posts by Rod David
The First Trade… Sitting? Duck.
Proper context can start the day with a solid win and make all the difference.
CHARTROOM LINK(s)
o New! Omnistream
o Anymeeting backup
(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Thursday gapped down, as had Wednesday. Thursday’s post-open rally peaked sooner than had Wednesday’s. Despite having been higher, it was reversed under the open’s low sooner. Buyers were learning to exit sooner. The afternoon did not recover. Buyers were learning to be patient. But only one traction factor triggered. Buyers still had not been conditioned to become sellers.
Overnight action’s new info…
Firming 5 points out of the Globex open soon surged 25 points into China’s open. It never extended higher. Hovering choppily at the highs — even through Europe’s opens — eventually did retrace all but 3 points of the gain.
If, then…
Last-minute sentiment before influential reports can be predictive from a contrarian perspective. So, did last night’s initial 25-point surge reflect optimism, or was it actually inhibited by pessimism? A little of both. Gapping up enough could trend higher intraday. But the trend is otherwise down, and not reacting up high enough for long enough would be likely to resume the decline.
First Trade…
Preliminary levels aren’t calculated ahead of the Employment Situation report.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1950.50 | 1942.50 |
| …would target | 1956.00 | 1948.00 |
| Bias-down: under | 1935.25 | 1927.25 |
| …would target | 1929.00 | 1921.00 |
| Signal status: NO-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)
All of Thursday morning’s rally from its 1945.00 low up to 1969.00 was retraced before entering the afternoon bias environment. The 1931.00 overnight lows were retraced entirely, too. But that last bit came after the 3:10-3:20 timing window.
Sellers are still hesitant. Still reluctant. Optimism isn’t necessarily alive AND well, but it’s alive. And that’s still bearish from a contrarian perspective.
Greeting Friday’s pre-open Employment Situation report even more optimistically can’t be discounted. An initially favorable knee-jerk reaction can’t be discounted. But there’s about 15 points of room for noise above Thursday’s close to 1948.00-1951.00 without even beginning to reverse the trend up.
And there’s a whole weekend of illiquidity just several hours following the news.
The next lower likely support is at 1907.00-1912.00. But the market still isn’t tracking any recovery template, and this is all in the context of presumably duplicating and magnifying August’s plunge.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.
Livestox Recording Jan 7, 2016 — corrected link
Thursday’s Livestox recording is below, and the stocks we addressed in order follow that. We began with a discussion of the recent stock market action, so please do not watch this while operating heavy machinery. (The original bad video link has been replaced. Thank you for alerting me!)
SPX
USO
GLD
RIG
CLF
HAL
TWTR
FEYE
GPRO
SUNE
GTLS
FOLD
DUK
AAPL
CARA
AMMJ
GWPH
INSY
SRNA
Pre-close View… Hope springs eternal.
Rally’s complete failure still finding buyers.
This morning’s rally from gapping down was more productive than yesterday’s. It peaked earlier, and its reaction down probed negative territory sooner. Lest we think buyers have been conditioned yet to expect an extended decline, there’s another bounce underway.
But the bounce is the product of conditioning, too. A much more developed conditioning effort, which is the 3:30 rally. Of course, it’s not reliable or consistent, but patient sellers are smart to step back while the dip is retraced.
The retest of the overnight 1931.00 low by 3 ticks has reacted up to 1942.25. Although the bias environment exit was under the noon hour’s low, confirmation during the 3:10-3:20 window was slow.
Perhaps the hesitation in extending down is only due to tomorrow morning’s Employment Situation report. Regardless, there is still no template with a reliable path back up at this stage of the pattern.