Posts by Rod David
Market Wrap (recording & summary)
The answer to everyone’s question is 2763. That’s what caused Tuesday’s drop. At least, that’s what turned whatever had triggered it into something far more substantial.
That’s ES 2763.00, from Tuesday’s First Trade: “Lower lows have potential to 2763.00, but probably no lower before bouncing to keep alive the rally’s momentum. Any deeper would overlap Friday’s cash session ‘lower prior highs’ when optimism needs to remain intact.“
Monday’s gap up had already held its retest of Friday’s range — a 61.8% retracement between Friday’s close and Monday’s low, which had produced the gap. The pullback could be retested, but not Friday’s range without rejecting the gap’s intent. I had said that sponsorship to get there was unlikely ahead of Wednesday’s illiquidity, to which Trump said, “Hold my beer” and sent his “tariff man” tweet.
As difficult as it would be to generate sponsorship in a less liquid environment, it would be difficult to stop it. The consequence exacerbated the pullback. It could have been shallower, and it could still be deeper. Tuesday’s low held a 61.8% retracement of the post-Thanksgiving rally 2629.00 up to Sunday night’s 2814.00 Globex high. Recovering from here would be more bullish than first extending down to the room for noise at 2656.00, but possible.
One potentially bullish factor to having so many headlines of different stories accompanying the plunge is that a lot of scapegoats can be discounted at once. Brexit drama, Yield curve inversion, China trade truce doubts… Each was already suspicious, and not a total surprise. And the break they induced under 2763.00 was exacerbated by Wednesday’s illiquidity
Also retraced was 61.8% of Fed Chair Powell’s speech surge last Wednesday, represented at Tuesday’s close. “Lower prior highs” from that morning were also tested. Tuesday night’s price action only firmed, not yet enough to suggest any particular resolution. I’ll add comments in the chaRTroom overnight.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.
Look ahead: Economic Calendar – for Thu Dec 6, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Wednesday’s day of mourning has doubled-up its reports onto Thursday’s calendar. The day is very busy, with multiple simultaneous pre-open and post-open reports, which can make otherwise lower-profile items more influential than otherwise. But ADP is Thursday’s only reliably influential report, delayed from Wednesday, and also very relevant to fine-tuning our expectations for Friday’s reaction to its Employment Situation report.
Challenger Job-Cut Report
7:30 AM ET
*ADP Employment Report
8:15 AM ET
International Trade
8:30 AM ET
Jobless Claims
8:30 AM ET
Productivity and Costs
8:30 AM ET
PMI Services Index
9:45 AM ET
Factory Orders
10:00 AM ET
ISM Non-Mfg Index
10:00 AM ET
Quarterly Services Survey
10:00 AM ET
EIA Petroleum Status Report
11:00 AM ET
*Raphael Bostic Speaks
12:15 PM ET
Treasury STRIPS
3:00 PM ET
Daily Spot…
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 Dec Contract (EC, ETF: (FXE, UUP))
Remaining under pressure through Wenesdayh’s break, Thursday’s open popped-up above the 1.1370 buy signal to test 1.1400 resistance up to the week’s 1.1415 highs.
Gold Feb Contract (GC, ETF: (GLD))
Probing Tuesday’s 1247.00 high Thursday up to 1250.00 wasn’t maintained, so the rally’s extension has yet to be confirmed and remains vulnerable to reversing down.
Silver Mar Contract (SI, ETF: (SLV))
Thursday’s failure to probe the 14.65 buy signal and instead dip to 14.45 support, doesn’t invalidate the opportunity to trigger the buy signal, but does start a time limit into the weekend.
30-year Treasury Jan Contract (US, ETF: (TLT))
The confirmed breakout requiring an eventual third higher close was on its way to being fulfilled Thursday. Holding pullbacks to 142-22 keeps alive the attraction to 144-04, whose recover would reinforce the rally’s momentum. Friday’s payrolls report is being greeted from a position of strength.
Crude Oil Jan Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Holding 52.15 as support Monday through Wednesday helps to continue forming a bottom, but it doesn’t prevent a dip like Thursday’s under 51.00. But this should now be enough backing-and-filling for the pattern to justify an optimistic launch of a rally leg.
Natural Gas Jan Contract (NG, ETF: (UNG, UNL))
The struggle to recover the 4.44 buy signal and its 4.63 confirmation has become an attempt to hold the 3.32 pullback limit.
Look ahead: Economic Calendar – for Wed Dec 5, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: The national day of mourning for the late President George H.W Bush has affected Wednesday’s econ calendar. Price action was trading in anticipation of previously scheduled items — Fed Chair Powell’s testimony, Beige Book greeting an open session, etc. — so we should assume there will be some added degree of volatility. The unusual trading halt for futures has an impact, too (I believe the 9:30 close is correct, and will update if I learn otherwise).
MBA Mortgage Applications
7:00 AM ET
ES Futures Halt
9:30 AM ET
Beige Book
2:00 PM ET
ES Futures Re-open
6:00 PM ET
Afternoon Bias
| TUE afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2772.50 | 2773.00 |
| …would target | 2779.75 | 2780.25 |
| Bias-down: under | 2761.75 | 2762.25 |
| …would target | 2754.50 | 2755.00 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET MET | . | |
| NEW: BIAS VIDEOS… INTRO // EXAMPLE | ||
1. At 1:20, 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 1:20 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 1:20 would invoke a grace period through 1:30 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 1:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.