Posts by Rod David
The First Trade & Pre-open Tour Recording… Optimism taking a break.
Proper context can start the day with a solid win and make all the difference.
DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A
Through the prior close…
Optimism remained alive and well at Wednesday’s open, regardless of the past two sessions’ fresh lows down to 2530.00. An overnight rally to 2562.00 gapped up, and extended intraday to greet the afternoon’s FOMC statement probing Tuesday’s 2578.00 highs. The knee-jerk reaction spiked up even higher to 2592.00. But it was doomed to failure because the open’s gap up was under Tuesday’s late high. The optimism was reversed back down to 2530.00, which was met on the way to 2500.00 and lower. The 2489.50 low reacted up to spend the final hour ranging back up to 2519.00, closing around 2505.00. Actively bearish WedEX was signaled.
Overnight action’s new info…
Another bounce attacked 2519.00 before rolling over to fresh lows. The slide pierced what is this morning’s 2478.25 bias-down target to 2476.00 at midnight, and bottomed there. Reacting up since then has recovered back above yesterday’s lows, even attacking the upper-end of its final hour’s range at 2518.00.
If, then… (notes to accompany the Tour recording)
A lot of relevant attractions are being neutralized, but the decline still has room down to 2453.00, A durable bottom will have formed when a couple of objectives are recovered through a couple of consecutive closes. None of which precludes another bounce, which the overnight low’s Isolation setup might produce. It will need the open and then the morning to hold above yesterday’s lows, and any less strength would likely resume the decline — even a Globex-Flip setup is trying to form. So, the question is whether sponsorship for a bounce can be generated after punishing recent bounces. Since the answer is probably not, then we’ll anticipate the overnight recovery failing this morning, if not already having failed by the open. Otherwise, I’m going to be suspicious of an Isolation setup, but I’ll still give it a benefit of the doubt until disproved — Santa Claus and his rallies have pulled off miracles before.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2497.75 would be less likely to trigger the 2492.25 bias-down signal at 10:15. Exiting the open under 2490.75 would be likely to trigger bias-down.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2522.00 | 2524.00 |
| …would target | 2533.00 | 2535.00 |
| Bias-down: under | 2490.25 | 2492.25 |
| …would target | 2476.25 | 2478.25 |
| Signal status: NO-BIAS, TESTED BIAS-DOWN SIGNAL | . | |
| NEW: BIAS VIDEOS… INTRO // EXAMPLE | ||
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.
Market Wrap (recording & summary)
Gapping up Wednesday above Tuesday’s 2562.50 late surge peak could have isolated the interim test of 2530.00. The overnight high probed it, so it wasn’t for lack of opportunity that the open was lower.
None of which precluded a morning rally, anyway. But as noted during the Market Tour, its origin wouldn’t be a position of strength — not a strong base to greet the afternoon’s FOMC events, and likely to fail.
A knee-jerk reaction up on the hike news touched 2592.00, still within the 2595.50 corrective bounce limit. Its reaction plunged, testing 2530.00 for its first time intraday, on the way down to and through 2500.00. Bouncing from 2489.50. Simultaneously oversold 1-min and 3-min RSIs will require an eventual retest. The actively bearish WedEX signal will be of interest Thursday afternoon.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.
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))
No further delay was needed before trending up through 1.1470 since Tuesday had confirmed Monday’s bounce. Wednesday’s open at 1.1470 did trend sharply higher to 1.1530 until FOMC news triggered a drop back down to 1.1470.
Gold Feb Contract (GC, ETF: (GLD))
Retesting 1255.00 overnight didn’t hold this time, and Wednesday morning trended up to fresh highs testing 1262.00. The FOMC reaction plunged down to 1248.00, which is the newly adjusted sell signal.
Silver Mar Contract (SI, ETF: (SLV))
Still testing 14.71 at the open, Wednesday morning firmed to fill the gap back up to the 14.83 high close. Its post-close reaction to FOMC fell back down to 14.71.
30-year Treasury Mar Contract (US, ETF: (TLT))
Already greeting Wednesday’s FOMC events from a position of strength, the morning trended up to fresh highs. Its reaction extended to probe 145-00, confirming Tuesday’s breakout to require at least an eventual third higher close.
Crude Oil Feb Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Wednesday’s bounce held its limit, while also not confirming Tuesday’s plunge as being a breakout. A bottom and recovery are now free to form, so extending to a fresh low close Thursday would be bearish.
Natural Gas Jan Contract (NG, ETF: (UNG, UNL))
Tuesday’s bounce that filled the gap back up to Friday’s 4.81 close had only neutralized attractions above, enabling Wednesday to reverse back down and attack fresh pullback lows. While basing is still likely, it could include dips to 4.33.
Mid-day Update… Only a little inhibited.
Noon hour’s high has corrected.
This morning’s test of 2574.00 was corrected down to yesterday’s 2562.50 late surge. The rally resumed to fresh highs during the noon hour, attacking this afternoon’s 2581.00 bias-up target.
And now this afternoon’s 2573.75 bias-up signal has failed to trigger. This is a no-bias environment, already having tested its bias-up parameters. News is coming — the FOMC policy statement at 2:00 and then the Fed Chair Q&A a half-hour later.
Testing the bias-up parameters would seem overly optimistic, if not having been retraced in time. Resuming the rally is possible, and at least a retest of 2581.00 is likely. Actually, a lot of volatility is likely. The pattern remains vulnerable to resolving down since the open did not form a solid base.