Posts by Rod David
The First Trade… Putting the “bigger” into bigger picture.
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…
Tuesday’s gap up to 1952.00 greeted the holiday-shortened week with extreme sentiment. That became a sentiment extreme that required dipping to 1944.00… which the morning promptly fulfilled. Having offset the earlier optimism with a quick dose of pessimism, the rally resumed gradually. Buyers gained traction by exiting the bias environment above the noon hour’s high and entering the final hour higher. The rally extended through the 1961.00 overnight high to 1968.75, closing under the session’s 1967.25 target.
Overnight action’s new info…
The rally soon resumed overnight and extended relentlessly to 1987.50 into Europe’s opens. Trying to resume the rally surged to 1992.00, only to react down to 1982.00. Now 1987.50 is being retested.
If, then…
Yesterday afternoon’s buyers had gained traction, but were already rewarded by then fulfilling the session’s 1967.25 target without closing above it. Not extending higher overnight would have meant reversing down sharply this morning. Having extended higher overnight — no matter how substantially — the rally should be immune to reversing down. This morning’s bias environment is likely to trend even higher, but pulling back instead would then be likely to recover and extend higher this afternoon.
First Trade…
Exiting the open at 9:45 above 1981.50 would be likely also to exceed the 1976.50 bias-up target through 10:15 to renew the bias-up signal, next targeting 1986.00. Exiting the open above 1986.00 would be likely to further renew the signal, next targeting 1996.00. Exiting the open under 1973.00 would be unlikely to recover 1976.50 through 10:15.
Morning bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1970.50 | 1968.50 |
| …would target | 1978.25 | 1976.25 |
| Bias-down: under | 1961.25 | 1959.25 |
| …would target | 1956.00 | 1954.00 |
| Signal status: BIAS-UP, BIAS-UP TARGET EXCEEDED | 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… skipping a beat
Pre-open action — both the powerful rally to 1961.00 and its late reaction down testing 1952.00 — had kept alive potential for extending higher to 1963.25 and 1967.25. But Tuesday ultimately couldn’t escape that greeting the new week with extreme sentiment does often prove to be a sentiment extreme.
Actually, Tuesday ultimately overcame the sentiment extreme. The consequence was a pullback testing 1944.00. It was touched at the morning’s low, offsetting the pre-open optimism with pessimism. The balance of the session rallied to fresh highs at 1968.25.
The intraday dip does suggest the rally may extend even higher than its 1967.25 objective to compensate for the delay. Suggesting against that is the target, which having been met, was never exceeded to put into play any higher level. Beware Wednesday’s session if Tuesday’s rally doesn’t extend higher overnight — regardless of Tuesday afternoon’s buyers having gained traction for their effort.
More detail, including discussion of the potential for a “session-long decline,” are described in the post-market Wrap recorded here:
https://roddavid10.mitel-nhwc.com/join/tyfpcyk
Join us in the chaRTroom overnight to monitor Globex:
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Pre-close view… Lemons from lemonade.
Premature rally crosses the finish line, anyway.
The noon hour’s attack on 1956.50 resistance reacted down too deeply to trigger the 1952.25 bias-up signal at 1:20. Then it extended more deeply to 1947.50, but it was never expected to reverse the trend down. In fact, the no-bias environment recovered back up to the 1952.25 bias-up signal. And then back up to 1956.50.
That’s no-bias trending. Trending beyond a bias signal, which didn’t trigger in time. The bias signal always requires being retested — often, so does the 1:20 print. That’s 1952.25 and 1948.50.
But the recovery extended. A sell signal at 1954.50 was only touched and not triggered. A buy signal that had triggered at 1950.75 remained intact. And it remained intact as the bias environment began lapsing from above the 1957.75 bias-up target. That test has extended up to 1964.00.
So long as 1961.75 and 1960.50 now hold as support, the rally can resume as it seemed ready to this morning. Already testing 1963.25, next higher is 1967.25, and potential for compensating the detour down by extending even higher.
Daily Spot… Stocks steal the show
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))
Firming Tuesday didn’t quite exploit last week’s failed breakout, but almost any initial strength Tuesday night or Wednesday would be credible for extending higher intraday.
Gold Dec Contract (GC, ETF: (GLD))
The pullback had extended slightly lower to test 1115.00, which was retested Tuesday without breaking lower. Back above 1125.70 would suggest the pullback had ended — it was touched Tuesday but not pierced.
Silver Dec Contract (SI, ETF: (SLV))
Weekend weakness still avoided filling the outstanding opening gap at 14.35 that presumably has been inhibiting a recovery from launching. But that may be left outstanding by a rally leg if not being filled soon.
30-year Treasury Dec Contract (US, ETF: (TLT))
Friday’s sudden pop above a multi-session range had never extended higher intraday, and it held tests of its 155-16 buy signal. Gapping down Tuesday back toward the prior range all but ensures probing under it to fresh lows before another bounce would be credible for extending higher.
Crude Oil Oct Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Holiday weakness never touched the prior low, or probed under it to threaten reversing down. There is no required timing for retesting the recent high and probing above 50.00.
Natural Gas Oct Contract (NG, ETF: (UNG, UNL))
Firming off of the lower-end of the recent narrow range only attacked the upper-end. That restrained optimism isn’t new, but it still makes credible any early strength Wednesday for extending higher.