Posts by Rod David
The First Trade… Not backing down.
Proper context can start the day with a solid win and make all the difference.
CHARTROOM LINK(s)
o Win XP-Friendly entry
o non-xp friendly (ilinc)
(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Tuesday’s gap up extended immediately through 2032.00-2033.00 resistance and fulfilled potential to 2041.50. An 11-point dip reacted up 16 points to attack 2046.00. But the probe of fresh session highs failed, as did its retest, before the close dipped back down toward session lows.
Overnight action’s new info…
Gradually ratcheting up to attack yesterday’s highs, a single probe higher has touched 2050.50. Its initial reaction down to test 2046.00 is now extending deeper to attack 2044.00.
If, then…
Yesterday’s rally gained no traction for its effort. Extending higher today would require gapping up above yesterday’s highs. Extending higher without gapping up is still possible, but then very likely to trend back down — especially if 2052.00 had been tested already. Trending at all this morning isn’t likely with this afternoon’s FOMC policy statement looming.
First Trade…
Exiting the open at 9:45 above 2044.00 would be likely to trigger the 2041.00 bias-up signal at 10:15. Exiting the open above 2051.25 would be likely to renew the bias-up signal by also exceeding its 2048.00 bias-up target at 10:15. Exiting the open under 2034.25 would be unlikely to trigger bias-up.
Morning Bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2050.00 | 2041.00 |
| …would target | 2057.00 | 2048.00 |
| Bias-down: under | 2039.00 | 2030.00 |
| …would target | 2034.25 | 2025.25 |
| Signal status: waiting for trigger | 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)
There’s no requirement for even a corrective bounce to reach 2052.00. But testing it before Wednesday afternoon’s FOMC policy statement could find all available buying pressure has been expended, leaving the market vulnerable to another downdraft.
That’s already a risk from Tuesday’s bounce having tested and (ultimately) held its 2040.00-2041.50 objective, rejecting its intraday probe up to 2046.00. Price action like the afternoon’s corrective dip back down to 2032.00-2033.00 helps to neutralize that overbought condition.
But meanwhile, the Friday-Monday Island pattern must be revisited at some point. And there’s on assurance of it holding and launching a more durable recovery. So a durable recovery’s best hope is not to react negatively to Wednesday’s rate hike (or lack thereof).
Details and other markets coverage are discussed in the post-market Wrap recording here:
https://roddavid10.mitel-nhwc.com/join/yptzyfv
This evening when you can’t access the intraday chaRTroom platforms, here’s the OmniView link (we’re switching to it exclusively soon, so please confirm you can access it easily):
https://v7.omnijoin.com/join?dn=srt1
Pre-close View… Also: starting the Wrap early.
Today’s post-market Wrap will begin at 3:40 ET, before the close.
Choppy ranging persisted through the afternoon bias environment as was expected, presumably from inhibition ahead of tomorrow’s FOMC policy statement. Perhaps a little too optimistically, as its reaction down from 2046.75 only reached 2036.75, ignoring its potential to 2034.25.
Turnabout is fair play. Bouncing back into the range has stopped has been resisted by the afternoon’s 2044.00 bias-up target, which is pessimistically short of the noon hour highs. Now the bias environment is lapsing, so the rally is vulnerable to resuming.
Breaking beyond either 2040.00 or 2046.00 would likely trend another 6 points in that direction, to 2034.00 with room for noise down to 2032.00-2033.00, or to 2052.00 with room for noise up to 2055.50. Beware of false breaks during the FOMC policy statement inhibition.
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 Dec Contract (EC, ETF: (FXE, UUP))
Monday’s failed intraday probe above last Wednesday’s high had proved that sponsorship was lacking to resume the rally. Tuesday’s dip attacking last Thursday’s 1.0920 low suggests its correction down to 1.0750-1.0785 is underway.
Gold Feb Contract (GC, ETF: (GLD))
Last week’s dip had stopped optimistically short of testing the 1057.20-1061.50 pullback limit, preventing a lower buy signal than the 1077.70 resistance that limited its reaction. Tuesday’s deeper dip more thoroughly tested the pullback limit, which now allows a close above 1070.00 to launch a new upleg.
Silver Mar Contract (SI, ETF: (SLV))
Bouncing prematurely to as high as 14.10 would still be required to fail and produce a third lower close. Tuesday only ranged narrowly, not even bouncing, but also not producing a third lower close.
30-year Treasury Jan Contract (US, ETF: (TLT))
Monday’s reaction down that filled the gap back to last Thursday’s close was extended sharply lower Tuesday morning to 153-30. That creates a lot of room to absorb a bounce or knee-jerk reaction up to 156-29 without resuming the rally.
Crude Oil Jan Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
An early probe above 36.70 resistance was ultimately recovered Tuesday morning and extended to 38.88. A second consecutive higher close Wednesday would signal that a much bigger bounce was underway. Back under 36.70 would trigger a retest of Sunday night’s low.
Natural Gas Jan Contract (NG, ETF: (UNG, UNL))
Fresh lows Tuesday fulfilled the structural requirement for at least a third lower close. But potential to 1.80 was missed narrowly, suggesting that a bounce would be premature.