Posts by Rod David
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))
The gap back to 1.0855 was filled before Thursday’s open. Retracing it through 1.0905 suggests an earlier gap up to 1.1000 will be filled also before likely resuming the decline.
Gold Feb Contract (GC, ETF: (GLD))
Thursday’s gap up trended higher intraday for a second consecutive higher close confirming Wednesday’s breakout. At least a third higher close or more is required before a reversal down would be credible for extending. Meanwhile, upside potential on this leg is to the 1137.00 area.
Silver Mar Contract (SI, ETF: (SLV))
Recovering back to prior highs is being suggested by Thursday’s test of 14.10, whose recovery nearly filled the gap back up to 14.40.
30-year Treasury Mar Contract (US, ETF: (TLT))
Another overnight drop encouraged another flight-t0-safety Thursday that pushed price well above its last relative highs of 155-14 and 155-29 to 156-25. Most of which had been retraced into the open. But closing back above 156-14 would likely retest 156-25, before reversing down to fulfill “unfinished business below” that is left outstanding.
Crude Oil Feb Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Breaking sharply Wednesday under 36.00 extended down further Thursday morning to test support around 32.00. Resistance is at 33.55 was tested, but ultimately held, keeping alive the likelihood for at least one more lower close.
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
The reaction to Thursday’s EIA report wasn’t down, although that likely would have been absorbed, if not also reversed up. Returning back to recent highs above 2.38 does posture the pattern to break higher without further delay, to avoid a deeper correction.
Mid-day Update… Buy, dog! Bad dog!
Gap-down buyers learning to get out sooner.
The 1948.50 open rallied 21 points to 1969.00. That’s bigger than yesterday’s post-open 17-1/2 point rally. But it’s weaker, in two regards.
First, yesterday morning’s gap down was bought almost all the way through the morning’s bias environment. This morning’s rally peaked at least 20 minutes sooner.
Second, while both reactions down ultimately extended back under their opening prints, yesterday’s probe came during the afternoon bias environment lapsing. Today’s probe under the morning’s low has come during the afternoon bias environment’s entry.
The latest sell signal triggered under 1963.25 before the morning’s bias environment began lapsing. It has already produced a 29-point drop to 1934.00. If sellers are being conditioned alongside buyers, then they’ll be increasing pressure —
— especially as the weekend’s illiquidity approaches exponentially faster with each passing minute. Steeper selling into 1932.00-1939.00 target area suggests the conditioning is complete.
Look ahead: Economic Calendar – for Fri Jan 8, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Friday’s pre-open Employment report includes seasonal help for the holidays. So, an uptick won’t necessarily be enough to buttress the rate hike scenario.
**Employment Situation
8:30 AM ET
Wholesale Trade
10:00 AM ET
*Baker-Hughes Rig Count
1:00 PM ET
Consumer Credit
3:00 PM ET
Afternoon Bias
| THU afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 1973.25 | 1965.25 |
| …would target | 1978.50 | 1970.50 |
| Bias-down: under | 1959.00 | 1951.00 |
| …would target | 1952.25 | 1944.25 |
| Signal status:BIAS-DOWN, BIAS-DOWN TARGET EXCEEDED | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
1. At 1:20, 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 1:20 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 1:20 would invoke a grace period through 1:30 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 1:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.
Post-open Review… Conditioning opportunity, dead ahead.
Another post-open bounce that isn’t likely durable.
The pre-open bounce’s post-open reaction down held 1945.00 to maintain its upside momentum targeting 1954.00-1956.50. The target’s pullback limit held, and the rally extended to 1961.00.
Its reaction down to almost 1951.00 lasted almost long enough to seal a top. But it was recovered by enough by 10:15 to marginalize sellers before extending the bounce to 1965.25-1966.50.
The target’s lower-end was just touched.
Back under 1959.00 would start to signal momentum reversing down. Reversing momentum back down could be limited to attacking the 1948.50 open. Any lower would start to signal fresh session lows and lower are in-play.
Meanwhile, the gap down’s post-open bounce has prevented conditioning market participants to be pessimistic. Not closing substantially higher will condition the market to sell gaps down — like the one being suggested for tomorrow by the active template.