Posts by Rod David
The First Trade… Waiting for the out crowd to get in.
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…
Ready, set, sell. Monday welcomed us back with an almost immediate resumption of Friday’s decline from its 1951.00 pre-open highs. Last week’s 1897.00-1899.00 lows were retested overnight. Sliding through late-afternoon attacked 1869.00. Sellers didn’t gain traction, but created potential at least down to 1864.00.
Overnight action’s new info…
Lower lows ahead of Europe’s opens had already probed 3 points under 1864.00 and then back above it. Its reaction up extended at a steep slope to 1886.00. That’s yesterday’s noon hour high, literally the afternoon’s high… retraced, but not (yet) rejected.
If, then…
Despite potential for extending down to 1864.00 or lower, “hold-short” wasn’t contemplated. That was ruled out by yesterday afternoon’s sellers not gaining traction, so fulfilling the target overnight could still recover into the open. In fact, that has happened, but it doesn’t mean the trend is reversed up. Not without recovering some relevant level through the open, which will depend upon what relevant level is touched. For example, a post-open probe above yesterday’s 1886.00 noon hour high that isn’t extending at 9:45 would become likelier to launch an attack on overnight lows. Otherwise, extending higher this morning wouldn’t likely extend for much longer than that, which would be unusual following yesterday’s session-long downtrend.
First Trade…
Exiting the open at 9:45 above 1886.00 would be likely also to exceed the 1887.25 bias-up target at 10:15 to renew the bias-up signal. Exiting the open above 1883.75 would be likely at least to trigger the 1881.50 bias-up signal at 10:15. Exiting the open under 1875.00 would be unlikely to trigger bias-up.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1891.50 | 1881.50 |
| …would target | 1897.25 | 1887.25 |
| Bias-down: under | 1880.00 | 1870.00 |
| …would target | 1874.00 | 1864.00 |
| Signal status: LATE BIAS-UP, TESTED BIAS-DOWN SIGNAL | 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)
[View the Bias parameters here]
That’s more like it. Monday wasn’t actually a “session-long decline” setup. Nevertheless, the session trended down throughout, with each timing window probing under its prior timing window’s low.
Had it been an actual session-long decline setup, then the following session would be likely to extend lower. But only Monday afternoon’s bias environment was actually exited under its prior timing window’s low, so sellers didn’t gain traction.
That may only reflect how uncommitted sellers still are. Bouncing here and there at this stage seems like rearranging deck chairs on the Titanic. Monday’s relentless decline still controlled its sentiment, and certainly didn’t reflect the sort of capitulation that might allow a bottoming process to begin.
Details and other markets coverage are discussed in the post-market Wrap recording here:
https://roddavid10.mitel-nhwc.com/join/kfyfvzb
This evening, monitor overnight Globex trading in the chaRTroom at:
XP-Friendly || non-xp ilinc
Pre-close View… The new “killing it.”
Intraday down trend persists.
Exiting the bias environment above a prior high or at least without having probed a fresh low could have signaled a short-squeeze coming. But the bias environment’s 1875.00 exit was bouncing 5 points off a fresh low.
The bounce extended up to 1881.00, but that was still 3 points short of the prior high — which, coincidentally, was this afternoon’s 1883.75 bias-down signal. So, no short-squeeze.
In fact, fresh lows retested the 1870.00 low by more than 1 point. That was during the 3:10-3:20 window, which is being exited by a bounce to 1974.00. Back under 1871.50 would start to signal one more downleg targeting 1864.00.
The pessimistic sentiment seems pretty stretched. But that’s not always bullish from a contrarian perspective. Extreme sentiment can become a perpetual motion machine capable of accelerating the decline’s pace if not rejected soon.
Daily Spot… Gold gets back.
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 Sep Contract (EC, ETF: (FXE, UUP))
Monday’s weaker open suggested that Friday’s bounce had neutralized excessive pessimism from Friday’s gap down. But it immediately began reversing up and probed above Friday’s high. Nevertheless, resolving to new lows remains likely so long as bounces hold 1.1265.
Gold Dec Contract (GC, ETF: (GLD))
Friday’s reaction down from Thursday’s surge to 1156.50 extended down Sunday night to open Monday back under the surge’s 1136.00 low, testing Wednesday’s 1128.00 low. Closing back above 1137.50 would suggest the reaction down had ended, but it otherwise has potential to retest 1117.00
Silver Dec Contract (SI, ETF: (SLV))
Monday’s gap down under last week’s lows was probed under 14.65 support whose recovery would signal the drop is only a temporary correction. Closing under 14.50 would all but require new lows under 14.20.
30-year Treasury Dec Contract (US, ETF: (TLT))
Presumably facilitated by Sunday night’s stock market drop, the Island created by Friday’s gap down was recovered already Monday after gapping up and then extending to retest Thursday’s 157-16 high. Unfinished business below was left outstanding at 153-26, which would be put into play back under 156-16.
Crude Oil Nov Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Renewed weakness only attacked last week’s lows, so far, on the way to fulfilling at least the 42.80 pullback target so long as bounces hold 46.00 as resistance.
Natural Gas Nov Contract (NG, ETF: (UNG, UNL))
After Friday’s inside day had held the range’s lower-end, gapping up above its 2.60 upper-end had extended already to 2.64. It reacted down back within the range, but a second consecutive higher close Tuesday would confirm a new upleg is underway.