Posts by Rod David
The knee-jerk reaction to China”s
The knee-jerk reaction to China”s rate cut hasn”t extended above 1948.50, but neither has it been rejected. Its reaction down has essentially defined the lower-end of a range back to 1930. Extending through 1947 and remaining above it at 9:45 would trigger a session-long rally that traps yesterday afternoon”s sellers, regardless of yesterday afternoon”s sellers having gained traction.
Gapping up open beyond the prior afternoon”s extreme is the only way to invalidate sponsorship that gained traction. Since yesterday”s close trended down, there would be an added expectation for trending up through the day. Similarly, since the session-long rally is being attempted, NOT ultimately triggering it at 9:45 would be as bearish as it could have been bearish.
Details and other markets coverage are in this morning”s pre-market Tour, recorded here:
https://roddavid10.mitel-nhwc.com/join/fbkpbtz
The First Trade… Rally set-up, or being set-up?
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…
The biggest one-day negative print Monday also produced one of the biggest intraday rallies. And one of the biggest intraday drops from there. Price trended down into the close — twice, as the afternoon”s 76-point slide from 1950.00 down to 1873.50 hiccuped to 1922.00, and then plunged again to 1867.50.
Overnight action”s new info…
1920.00 is Tuesday morning”s bias-up target, so it”s not coincidental the overnight rally initially peaked there and then double-topped there ahead of China”s open. Dropping down to 1885.50 was recovered as the overnight rally resumed, eventually probing above 1936.00. Consolidating there blipped-up on news of a China rate cut and devaluation. A “blip-up” in this environment means double-digits, attacking yesterday”s highs up to 1948.50. A 12-point reaction down has now largely recovered.
If, then…
Is a rally setting up for today, or is the overnight rally being set-up? Yesterday afternoon”s 1947.00 high printed as the bias environment got underway. So, after trending down into the close, gapping up above 1947.00 could form a “session-long rally” setup. The missing element would be to maintain the gap up through the open. Otherwise, the setup can become as bearish as it would have been bullish. The bearish consequence would be attracted down to fill the gaps at yesterday”s 1886.00 and 1878.00 cash and futures closes. There isn”t much attraction above except for the gaps back to Friday”s 1968.00 and 1970.00 closes.
First Trade…
Exiting the open at 9:45 under 1910.00 would be unlikely to exceed the 1920.00 bias-up target through 10:15, not renewing the bias-up signal. Exiting the open above 1938.00 would likely exceed 1920.00 at 10:15 to renew the bias-up signal. Exiting the open under 1890.50 would be unlikely to trigger the 1910.00 bias-up signal.
Morning bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1916.50 | 1910.00 |
| …would target | 1926.50 | 1920.00 |
| Bias-down: under | 1866.25 | 1860.00 |
| …would target | 1855.25 | 1849.00 |
| 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.
The bearish WedEX had no
The bearish WedEX had no influence Monday, probably for having already exceeded the orbit of influence by the time of Monday”s open. That was a gap down which immediately followed a trading halt. The halt may have been produced by strong hands, but extending beyond it immediately is more reflective of weak-handed sponsorship, so its oversold RSIs don”t require a retest.
Yet, it was Monday afternoon that trended down. The morning”s decline wasn”t extended, but its 61.8% correction wasn”t rejected. The morning”s recovery back above 1882 — i.e. the “throat” of October”s “V” bottom — was rewarded by extending up to 1950 intraday. But 1882 didn”t maintain its recovery through the close, so the morning”s recovery is no longer relevant.
More so, Monday”s sellers gained traction. The afternoon”s bias environment was exited at 2:30 under the noon hour” slow, and the final hour was entered at 3:00 under the bias environment”s low. Sellers are likely to control Tuesday morning, or else a bounce Tuesday morning will fail and they”ll control the afternoon. Only gapping up above Monday afternoon”s 1946 high would suggest otherwise by forming a “session-long reversal” setup.
More details and other markets coverage were discussed during the post-market Wrap, recorded here:
https://roddavid10.mitel-nhwc.com/join/pcrvmcx
After 6:00 ET, use one of these links to monitor overnight Globex action in the chaRTroom:
Win XP-Friendly — http://anymeeting.com/605-609-199
non-xp friendly — https://roddavid10.mitel-nhwc.com/join/bfyytsh
Pre-close view… Head-fake, or shoulder shrug?
Huge morning recovery retraced by 61.8%, and shrinking.
Rallying out of the open”s spike down to 1831.00 had probed back above 1900.00 inside of 10 minutes. That was extended by 61.8% to into the noon hour”s 1950.00 highs.
I asked earlier whether that was just a head-fake, and now 1876.00 is being tested. That”s a 61.8% retracement of the recovery, which is normal. But that”s not yet a head-fake. The decline could probe under 1859.00 and still not prove it isn”t just a temporary correction.
That said, sellers did gain traction for their effort. No matter what may happen before the close, nothing will change that the bias environment was exited under the noon hour”s low and the final hour was entered under the bias environment”s low.
Their reward is to trend under this afternoon”s lows, for an entire timing window. The balance of the session need not trend down, but the head-fake keeps that door open.