Posts by Rod David
The First Trade… Stop blinking, you’re missing it.
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…
(Values have been updated to Dec pricing, which becomes the front-month at this morning’s open) Gapping up Wednesday to 1977.00 resistance couldn’t resume the overnight rally, but easily retraced it, and by a 2-point margin down to 1956.25 through the morning bias environment’s exit. A noon hour bounce to 1965.00 was obviously weak-handed resolved down to 1941.00 through the afternoon bias environment’s exit. That neutralized unfinished business outstanding from Tuesday, but wait, there’s more… Another downleg plunged to 1926.25, essentially turning a 29-point rally into a 29-point loss.
Overnight action’s new info…
A relatively slightly lower low at 1924.00 couldn’t attract sponsorship to resume the decline, and prices firmed into and out of midnight. The firming accelerated and extended to test 1947.00 into Europe’s opens. Then things got interesting… A plunge to 1933.50 was soon recovered to fresh highs attacking 1958.00 — which is interesting enough, but that surge has been retraced entirely and then some back down to 1932.00, probing under yesterday’s close.
If, then…
My premise at yesterday’s close was that sellers were most vulnerable. After neutralizing downside attractions, the decline not only extended but plunged, at a time when extreme sentiment tends to be a sentiment extreme, i.e. capitulation. And that still didn’t put into play any lower objectives, since sellers didn’t gain traction for their effort — only the bias environment exit was under its prior timing window’s low. So, did the overnight rally fulfill that premise and neutralize it? Its peak was a 61.8% retracement of yesterday’s intraday drop, which qualifies it as a correction. But that was overnight, and its retracement does allow the intraday crowd a bite at that apple. They’ll have to greet the open already in rally mode to prevent the latest overnight leg from gaining its own traction and resuming yesterday’s drop.
First Trade…
Exiting the open at 9:45 above 1941.25 would be likely also to trigger the 1939.50 bias-up signal at 10:15. Exiting the open under 1935.00 would be unlikely to trigger bias-up. Exiting the open under 1926.50 would be likely to trigger the 1928.50 bias-down signal at 10:15.
Morning bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1950.00 | 1939.50 |
| …would target | 1955.75 | 1945.50 |
| Bias-down: under | 1938.75 | 1928.50 |
| …would target | 1932.25 | 1922.75 |
| Signal status: LATE NO-BIAS, 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
Wednesday’s decline wasn’t satisfied just to retrace Tuesday’s 1952.25 no-bias trending origin and its 1:20 print at 1948.50. The last half-hour slid 24 points to 1935.50.
That’s a lot of selling pressure. Not just its depth, which widened an already wider range than the two prior sessions. But also its slope, which was rushing for the exits faster than any other of Wednesday’s timing windows.
That relentless and substantial momentum may be the most bullish element to leave Wednesday’s session. The drop neutralized attractions below without creating new ones, while sentiment was extreme. Not extending down Thursday would be bullish — but preferably while also gapping open back above 1948.50-1952.25 (basis Sep, 1939.75-1943.00 basis Dec).
Extending down anyway without being required and without unfinished business above outstanding would suggest the decline has something in mind more substantial, and lower. Details and other markets coverage are in the post-market Wrap recording here.
After 6:30pm ET, use these links to monitor overnight Globex trading:
XP-Friendly || non-xp ilinc
Daily Spot… Gold is gone.
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))
Wednesday’s gap down immediately began failing to exploit Tuesday’s firming, which had avoided confirming any prior breakout. Reversing up almost immediately does barely qualify as exploiting the recent stability. But there is no time left for a bullish pattern to delay extending higher.
Gold Dec Contract (GC, ETF: (GLD))
Having tested the 1125.70 bounce limit at Tuesday’s high, the decline was free to resume Wednesday, which it did aggressively by falling to new lows testing 1100.00. Extending under 1098.40 would require new lows under 1078.00.
Silver Dec Contract (SI, ETF: (SLV))
Still delaying the gap-fill back down to 14.35 despite Gold now tumbling makes the pattern even less decipherable, and less interesting to trade without it first resolving that issue.
30-year Treasury Dec Contract (US, ETF: (TLT))
Extending Tuesday’s 154-17 sell signal gapped down Wednesday to fresh lows testing 152-14. That was recovered as stocks fell, back into positive territory probing 10 ticks above the 154-17 sell signal. The sell signal was not confirmed, but retesting Wednesday’s gap open at 153-14 would help a recovery attempt to extend higher intraday.
Crude Oil Oct Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Sliding only slightly Wednesday to 44.10 still managed to probe under Tuesday’s low. Now there’s a timing requirement to begin probing fresh highs above 50.00, as any aggressive weakness Thursday would be credible for extending down.
Natural Gas Oct Contract (NG, ETF: (UNG, UNL))
Still bouncing within its recent narrow range is greeting Thursday’s EIA report from the range’s lower-end, but still within the range. That’s still not an enviable position of strength, unable to avoid an initially negative knee-jerk reaction down. But recovering a reaction down that originated within the channel would help to form a bottom.
Pre-close View… Done, or down?
Unfinished business below is neutralized.
Yesterday afternoon’s 1952.25 bias-up signal didn’t trigger. That didn’t prevent extending higher to and through its 1957.75 bias-up target before the bias environment had lapsed.
That didn’t invalidate the “no-bias trending” that required being retraced. But it reflected an underlying counter-trend sponsorship to be feared and respected. In fact, Tuesday’s rally extended another 11 points into the close, and then another 23 points overnight. That didn’t invalidate the no-bias trending’s required retracement, either.
There’s no timing element to that retracement. But it has now been retraced entirely, down to 1949.75. Nothing lower is required, although there’s potential to yesterday’s 1948.50 print at 1:20.
Meanwhile, the final hour was just entered back above the bias environment’s lows. It was positioned to be more decisive than it accomplished, but trending back above a relevant higher through 3:10-3:20 should be feared and respected. Otherwise, it might be impressive enough just to retest 1967.25.