Posts by Rod David
The First Trade… Yesterday’s traction seems intent.
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…
Wednesday night”s rally into Thursday”s gap up had extended to the first of my corrective bounce limits at 1986.00, up 48 points on the day. That was met by a 42-point plunge to fresh post-open lows at 1944.00. Sellers gained traction for the effort, and then hibernated on their laurels as the balance of the session retraced that plunge. Entirely. A 96-point round trip in the span of two hours.
Overnight action”s new info…
Initially extending yesterday afternoon”s recovery of 1986.00 to fresh highs at 1992.75 proved short-lived. The balance of the night has been retracing the recovery, back down to 1967.50. A 10-point bounce there was retraced entirely, producing a 7-point bounce to 1974.50.
If, then…
Afternoon traction isn”t signaled as often as it has been this week. Also different for the setup is how the market has been rewarding it, by only preventing the opposition from extending, and not by extending the traction. Of course, extending the traction is difficult in the face of such abnormally wide overnight reactions hasn”t been done all week. Is it surprising that a normal resolution may be a creature of normal market environments? Regardless, the consistent feature to this indicator is the context it provides. And if the open doesn”t immediately invalidate the prior afternoon”s traction, then that traction will still determine direction for the next morning and/or afternoon.
So, will yesterday afternoon”s sellers be rewarded by trending under their 1944.00 low today? When the overnight high has been almost 1993.00 and the open is indicated around 1970.00, perhaps we should focus on whether the morning will be attracted next to 1944.00 or to 1993.00, before bothering with what happens after it gets there. As for that potential to trend under yesterday”s lows, I wouldn”t waste my attention on this just yet. But it”s still fun to keep that notion not too far in the backs of our minds to pull out later — especially if the fast-approaching weekend illiquidity is met by retracing even more of yesterday afternoon”s rally.
First Trade…
Exiting the open at 9:45 above 1980.50 would be unlikely to trigger the 1979.50 bias-down signal at 10:15, which WOULD be likely to trigger if the open were exited under 1970.50 at 10:15. And exiting the open under 1964.50 would be likely also to renew the bias-down signal by not recovering its 1969.50 bias-down target at 10:15. Exiting the open above 1986.00 should at least test the 1990.00 bias-up signal.
Morning bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1993.25 | 1990.00 |
| …would target | 2004.25 | 2001.00 |
| Bias-down: under | 1982.75 | 1979.50 |
| …would target | 1972.75 | 1969.50 |
| 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.
An 42-point plunge during Thursday”s
An 42-point plunge during Thursday”s last 60-90 minutes underscored the relevance of 2086 being a potential corrective rally limit. Its 42-point recovery before the close suggests the corrective rally may have further to go before resuming the decline. The late recovery was otherwise just noise, not accomplishing anything new before coming to within 3 minutes of the cash session close.
Thursday afternoon”s sellers gained traction for their efforts. So, they”ll be rewarded with control of Friday morning”s bias environment unless the open were to maintain its recovery above Thursday”s 2086 high. Higher corrective rally targets at 2096 and 2000 could be met overnight to neutralize their attraction and allow a downleg to get underway.
Details and other markets coverage were discussed during the post-market Wrap recorded here:
https://roddavid10.mitel-nhwc.com/join/cxschhf
Ater 6:30 ET, use one of these links to monitor Globex action in the chaRTroom:
Win XP-Friendly — http://anymeeting.com/777-796-864
non-xp friendly — https://roddavid10.mitel-nhwc.com/join/bfyytsh
Pre-close view… Fools rushed in.
Minimum corrective bounce target met.
This afternoon”s 1986.00 bias-up target was already being tested at 1:20. It wasn”t exceeded to renew the bias-up signal. But it was still a bias-up environment… until 2:30 when the bias environment began lapsing. Or until coming within 10-15 minutes of that.
In fact, that”s when this afternoon”s 1976.00 bias-up signal started giving way as support. All the way down to 1944.00. That was actually a test of the 1949.00 target, and each bar there overlapped 1949.00, warning that sellers were losing momentum. Combine that with oversold RSIs, and suddenly 1979.00 is being tested as resistance.
Having tested one big corrective bounce target at 1986.00, any higher target would still put into play 1996.00 and 2000.00. Regardless, this remains only a temporary rally, prior not only to retesting the week”s lows, but probably also to resuming the aggressive decline.
Daily Spot… Testing limits all over the place.
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))
The maximum pullback limit was probed Thursday, making a retest of fresh highs above 1.1800 much more difficult without either gapping up sharply to reject Thursday”s break, or else taking time to develop an accumulative pattern.
Gold Dec Contract (GC, ETF: (GLD))
Wednesday”s consolidation under the 1125.40 pullback limit didn”t extend down Thursday but the consolidation must now resolve up to confirm the pullback has been only temporary.
Silver Sep Contract (SI, ETF: (SLV))
Thursday”s surge back up to 14.55 resistance helps to begin forming a bottom that could launch a recovery without trending down to lower lows. But it is premature to begin recovering yet..
30-year Treasury Sep Contract (US, ETF: (TLT))
Fresh low finally reacted up intraday to test the 157-07 buy signal, which wasn”t recovered, much like the decline”s last two buy signals were attacked to within 1-2 ticks before resuming the decline.
Crude Oil Oct Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Thursday”s gap up trended considerably higher throughout the day, much more so than the bottoming pattern suggested was likely at this stage. Regardless of being so substantial the reversal attempt is too premature and impatiently formed to avoid a retest of the lows before completing a bottom.
Natural Gas Aug Contract (NG, ETF: (UNG, UNL))
.Thursday”s EIA report wasn”t being greeted from a position of strength, and the knee-jerk reaction up recovered to fill the gap back to Wednesday”s 2.69 close. But only temporarily, as the balance of the session drifted back down to the week”s lows testing 2.63. Early strength Friday above 2.69 would be credible for extending higher intraday.