Posts by Rod David
Pre-close View… Detour down?
No-bias trending is exacerbated by California headlines.
We discussed before Tuesday’s close that today would likely correct its late surge by dipping back down into yesterday’s range. That’s because the surge was sponsored by weak hands.
Today was never required to recover, at least not before the final hour. The afternoon’s no-bias environment took advantage of that extra window. It probed under its 2091.00 bias-down signal, fulfilling potential down to 2088.00.
Headlines along the way revealed what appears to be a terrorist incident in San Bernardino. That only exacerbated the decline’s trending, which has extended down to 2075.50. That’s where 3-minute RSI finally left oversold territory, while 1-minute RSI diverged positively. And that has bounced up to 2081.00.
Probing under 2091.00 was already sponsored by weak hands. The excess is in knee-jerk reaction to news headlines, which is the definition of weak hands. A recovery must at least retest 2091.00, if not also 2094.50 where the 1:20 no-bias signal triggered.
Meanwhile, having filled the gap back down to Monday’s 2082.00 close, closing today above 2088.00 would maintain the likelihood for extending higher tomorrow. Otherwise, tomorrow’s open must recovery 2095.00 to resume the rally without first dipping any deeper for any longer.
Daily Spot… Volatility increasing, something’s coming.
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))
Tuesday’s gap up was retraced Wednesday as the recent lows were probed intraday. But once again, they held their test instead of breaking lower. Closing back above 1.0600 would be the minimum requirement to signal a bottom has formed.
Gold Feb Contract (GC, ETF: (GLD))
Last Friday’s 1054.50 gap down had required a retest from above, and it was filled Wednesday. The 1049.00 low was tested, too. Closing back above 1054.50 would have sealed a bottom, but it was still being overlapped. There is on lower objective, so any initial rally Thursday would be likely to extend higher intraday.
Silver Mar Contract (SI, ETF: (SLV))
Although there was no unfinished business below, Wednesday probed under prior lows. Closing back above the original 13.97 gap down was all but required to prevent a new downelg from launching.
30-year Treasury Jan Contract (US, ETF: (TLT))
Tuesday’s 2-point surge wasn’t extended higher Wednesday, which fails to confirm it as a breakout. A fresh ihgh up to 156-12 is likely, regardless of its resolution.
Crude Oil Jan Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Long having passed the upside potential from the recent basing, even the most bullish pattern required probing fresh lows. Wednesday’s mixture of headlines triggered that probe, so that avoiding a second consecutive lower close Thursday would fail to confirm a breakout.
Natural Gas Jan Contract (NG, ETF: (UNG, UNL))
Fresh lows Wednesday constitute a breakout from a multi-session consecutive range, and confirmation from a second consecutive lower close would require there eventually to be a third.
Mid-day Update… Down may be done, but up is still out.
Pullback target met.
The morning bias environment’s range was resisted by its 2103.00 bias-up signal. Holding its test through 10:15 had put into play an offsetting test of the 2095.50 bias-down signal. The actual break lower was slow arrive, but very quick to fulfill its objective.
The likelihood for probing even lower was fulfilled during the noon hour’s test of 2091.50. Except for 2090.00, the pullback we discussed before yesterday’s close wasn’t likely to probe much deeper.
That doesn’t equate to being a buy signal. Lower lows could yet be probed in the context of a temporary pullback — even 2088.00, so long as the close had recovered.
Bouncing is possible, too. In fact, the reaction to Yellen’s noon hour speech remarks just reacted up 5 points. But resuming the rally today is not required. The corrective influence may persist into the final hour, and any earlier bounce would be suspicious.
Look ahead: Economic Calendar – for Thu Dec 3, 2015
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Thursday’s steady stream of econ reports and Fed speakers (including Yellen again) is preceded by the ECB’s policy statement. But most influential of all is Mario Draghi’s press conference, which produces multi-point blips and dips with almost every sentence he says.
ECB policy statement / Draghi conference
7:00 AM ET
Challenger Job-Cut Report
7:30 AM ET
Jobless Claims
8:30 AM ET
Gallup Good Jobs Rate
8:30 AM ET
*Loretta Mester Speaks
8:30 AM ET
PMI Services Index
9:45 AM ET
Bloomberg Consumer Comfort Index
9:45 AM ET
*Janet Yellen Speaks
10:00 AM ET
Factory Orders
10:00 AM ET
ISM Non-Mfg Index
10:00 AM ET
EIA Natural Gas Report
10:30 AM ET
*Stanley Fischer Speaks
12:30 PM ET
Fed Balance Sheet
4:30 PM ET
Money Supply
4:30 PM ET
Afternoon Bias
| WED afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2100.25 | 2099.00 |
| …would target | 2105.00 | 2104.00 |
| Bias-down: under | 2092.00 | 2091.00 |
| …would target | 2087.25 | 2086.00 |
| Signal status: NO-BIAS | 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.