Posts by Rod David
Post-open review… GIGO.
Potential for trending no better than its sponsorship.
The software programming world coined the phrase, but its meaning is age-old: (If) garbage in, (Then) garbage out.
Similarly, without strong-handed sponsorship, trending opportunities are rare. At least, reliable trending, not to mention non-erratic.
The open had an opportunity to leave behind the overnight pessimism, but couldn”t hold above 1927.00 through the open. Its aggressive reaction down had an opportunity to retest overnight lows, but couldn”t get under its 1916.25 3-minute low.
Picking the resolution”s direction from the middle of a range isn”t that difficult within a trend. But gapping open without extending or reversing through the open is the opposite of trending.
There is transparency when probing either end of the consolidation. And probing the open”s 1930.00 high didn”t reveal any change in sponsorship. So, a reaction down was expected, and now 1920.00 is being tested.
Extending down to the range”s other end would target 1910.25 or 1908.25. Weak-handed sponsorship might suggest that its test would hold, but that would depend on its timing — weak-handed counter-trend sponsorship might be unable to prevent price collapsing from its own weight.
The Employment Situation report”s knee-jerk
The Employment Situation report”s knee-jerk reaction from 1929.50 spiked down to test 1924 and then surged 12 points to 1936. Other considerations soon took over, taking price down sharply to fresh lows at 1910.50.
The volatility shows no signs of retreating, as the most recent pre-open range is essentially 1918-1924. That”s both wide, and developing almost entirely under a prior low.
Recovering 1921 and 1925 through the opening 15 minutes could put in a bottom for the morning. And this being a Friday, perhaps a bottom for the day. Anything lower would be vulnerable to retesting the 1910.50 pre-open low. And not already recovering through the open would be vulnerable to retesting the 1989.50 prior low.
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The First Trade… And THAT’S the good news.
Proper context can start the day with a solid win and make all the difference.
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(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Thursday”s gap up immediately extended Wednesday”s last-minute breakout and extended to a 26-point gain attacking 1977.00 by mid-morning. The balance of the day fell back to unchanged, and momentarily through it to 1942.00. Closing around 1847.00 was essentially flat on the day.
Overnight action”s new info…
Plunging 21 points to 1928.00 soon after the Globex open was retraced almost entirely back to 1946.00. The balance of the night has been spent trending back down to and through the plunge”s low to 1922.00. Its reaction up to 1929.00 has extended up to 1931.00.
If, then…
.Trending overnight ahead of an Employment Situation report is unusual. That either reflects how volatile the environment has become, how inconsequential the report is, or how much of a bounce is coming. A bounce? For all of its volatility and probing lower lows, yesterday afternoon”s choppiness didn”t gain traction. That”s no more reliable of a bias to launch trending, than was Wednesday”s late breakout. Gapping down is the only way to extend trending that didn”t gain traction, so the burden of proof is on buyers to absorb the drop. If not yet trending up through the open, then trending down intraday will depend greatly on the reaction already to payrolls. Which is why…
First Trade…
I don”t have preliminary indications ahead of the Employment Situation report
Morning bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1957.50 | 1955.25 |
| …would target | 1965.00 | 1962.75 |
| Bias-down: under | 1942.25 | 1940.00 |
| …would target | 1936.25 | 1934.00 |
| Signal status: waiting for trigger | 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.
From a contrarian perspective, Thursday
From a contrarian perspective, Thursday afternoon”s downward bias is potentially bullish for Friday. Despite followig a tremendous downleg, and developing entirely under natural support of the morning”s low, two consecutive timing windows overlapped the same range. Lower lows throughout never extended. Exiting the bias environment under the noon hour”s lows didn”t probe lower at relevant times. A lot of selling pressure was expended, without putting into play lower objectives for the effort.
None of which precludes there being an initially negative knee-jerk reaction to Friday”s pre-open Employment Situation report. None of which requires a favorable reaction. But it”s the basis for either of those to resolve up. And having that basis, NOT soon resolving up or maintaining initial gains would be that much more bearish. The market is fast-approaching two days of illiquidity and a third not so liquid day, which at least ensures that even sideways ranging will range widely.
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