Posts by Rod David
The First Trade & Pre-open Tour Recording… Will lightning strike out twice?
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…
Greeting Tuesday’s open in rally mode wasn’t bearish; nor was gapping up. But already fulfilling the doubly-renewed bias-up up target did increase potential for backing-and-filling, if only because the rally had room for a correction without damaging the chart. The open missed a couple of opportunities to resume the rally, so the pullback began. But it extended into Monday’s range (probing under the overnight low) when the rally needed the pullback to stop optimistically short. And a late bounce back above Monday’s high settled back under it to render Tuesday’s optimism as ineffectual. A second-day confirmation to Monday’s recovery attempt failed its own attempt. But similar to Monday’s recovery that had stopped short of closing above a prior high, Tuesday’s reversal avoided closing under a prior low, keeping momentum in flux.
Overnight action’s new info…
Tuesday’s 2621.50 low had printed during the afternoon bias environment, which was exited in rally mode. Its 2661.00 peak was already reversing down into the close and got to 2628.00. Price action since then has trended up relentlessly, probing yesterday’s late bounce up to 2667.00 — and threatening to gap up above Monday’s highs.
If, then… (notes to accompany the Tour recording)
The burden of proof is back on buyers. Tuesday’s otherwise normal pullback extended too deep when China trade war rhetoric hit the headlines. Its influence on price is already retraced, so its attraction above is already neutralized. Recovering it again through the open could be credible for resuming Monday’s rally effort. Meanwhile, the overnight bounce is a function of more China trade war headlines, and not maintaining its gain through another timing window would indicate more vulnerability to sellers regaining control.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2651.50 would be unlikely to exceed the 2655.00 bias-up target through 10:15 and renew the bias-up signal. Exiting the open above 2649.50 would be likely at least to trigger the 2645.75 bias-up signal at 10:15.
Morning Bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2645.50 | 2645.75 |
| …would target | 2654.75 | 2655.00 |
| Bias-down: under | 2630.25 | 2630.75 |
| …would target | 2624.75 | 2625.25 |
| Signal status: BIAS-UP, BIAS-UP TARGET EXCEEDED | . | |
| 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)
Monday’s binary template allowed a bottom to form from probing under October’s low, but Monday afternoon’s rally stopped short of signaling momentum had reversed up. A second-day confirmation was acceptable, even if that included a post-open dip of backing-and-filling through the morning. Its only condition was to keep alive excessive optimism, preferably by holding above Monday’s range.
Coinciding with more rhetoric than actual developments in the China trade war, Monday’s range was probed in the morning. A less optimal knee-jerk reaction down failed only dug deeper into the afternoon, probing under overnight lows. The late bounce back up through Monday’s late high came early enough to not be labeled a correction — only to dip back down into the close and put the burden of proof back on buyers.
The binary template is viewing Monday’s afternoon-overnight bounce as a correction before resuming the decline. That’s a big correction. Oversold RSIs outstanding from Monday’s low meanwhile welcome a retest. And there’s no bullish reason to retest that chart point. There’s always a path higher, but anything short of another overnight rally would be a less than optimal start.
Details and other markets coverage are discussed in the post-market Wrap recording here, which was held an hour before the close.
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 Dec Contract (EC, ETF: (FXE, UUP))
Initially rallying overnight from Monday’s 1.1360 pullback only gapped up Tuesday before reversing down to fresh lows at 1.1310. This tests the current uptrend’s last relative low at 1.1315, and now allows a recovery above 1.1405 to signal the rally resuming.
Gold Feb Contract (GC, ETF: (GLD))
Retesting 1255.00 resistance before Tuesday’s open was already being rejected at the open, which failed a recovery attempt before reacting down under 1246.00 .
Silver Mar Contract (SI, ETF: (SLV))
Gapping up Tuesday to test 14.82 represents a breakout above the 14.65 buy signal, except that the balance of the morning reversed down and filled the gap back down to Monday’s 14.60 close. The 14.75 gap up is above prior highs and may attract price back up to retest if its rejection doesn’t extend down through Wednesday’s open.
30-year Treasury Jan Contract (US, ETF: (TLT))
An overnight dip held the 142-30 pullback limit to open Tuesday unchanged and then to firm back up toward Monday’s 144-00 highs. The uptrend remains intact, even if only by default.
Crude Oil Jan Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Gapping up and firming slightly Tuesday wasn’t yet sufficient to resolve the ongoing basing, while the growing delay is making at least a blip-down to fresh lows. So, post-close API and Wednesday’s EIA reports are being greeted from a position of strength that may at most enable the recovery from fresh lows, but could still maintain the recovery of an initially favorable knee-jerk reaction up.
Natural Gas Jan Contract (NG, ETF: (UNG, UNL))
Still challenged at 4.63 resistance overnight, Tuesday morning dipped back down to test 4.44, which must hold Wednesday, too, to greet Thursday’s EIA report from a position of strength.
Mid-day Update… Back-and-fill, or back to decline?
REMINDER: I’M AWAY FOR TODAY’S LAST HALF-HOUR, SO MARKET WRAP WILL BE HELD EARLY…
Potential to backing-and-filling this morning became more vulnerable as the overnight rally extended. It got to 2678.00 and ignored opportunities resume, instead retracing down to 2632.75. That’s well back under yesterday’s 2648.50 late high, its afternoon high, and touching its noon hour high. This stage of the rally effort depended largely upon maintaining excessive optimism, and avoiding yesterday’s session was optimal.
A quick dip into yesterday’s range would have kept optimism alive, but the dip has not been quick. And now the dip is threatening to extend.
This afternoon’s bias-down signal triggered, already fulfilling its target. Exiting the afternoon bias environment in an hour and recovering its 2646.25 bias-down signal would get another opportunity to resume yesterday’s recovery attempt. Trending down through the bias environment exit would remain vulnerable to resuming the decline.