Posts by Rod David
The favorable knee-jerk reaction to
The favorable knee-jerk reaction to this morning”s payrolls number spiked up more than 5 points to 2078.50. Its retest up to 2079 has reacted down to the spike”s origin, erasing the entire gain. That”s not yet bearish — this is still positive territory above 2069-2071, and the overnight rally was just corrected by the reaction down. Recovering above 2077.25 would be credible for extending higher this morning. Meanwhile, not recovering 2076 would suggest new buyers aren”t being attracted, and back under 2069 would reverse the trend underway since yesterday afternoon”s lows.
Details were discussed in the pre-market Tour:
https://roddavid10.mitel-nhwc.com/join/cxspjkj
The First Trade… Not a lot of fear.
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…
Gapping up to the 2074.00 area in reaction to favorable Greece news managed to hold up through the open. The balance of the session, not so much. The open”s session-long rally setup became inverted. The inversion was confirmed by falling to 2060.00 through the afternoon”s bias environment. But the last hour rallied anyway back up to 2070.00.
Overnight action”s new info…
Initially firming up to 2072.00 soon began reacting down to test 2068.00. Recovering back up to 2072.00 into Europe”s opens extended higher to 2076.25. Now a test of 2072.00 as support is reacting up, as the rally tries to extend.
If, then…
Sentiment isn”t extremely optimistic overnight, but it”s certainly not pessimistic. And yesterday”s final hour rally was pretty optimistic already. Even yesterday”s intraday slide developed entirely in positive territory. The three-day weekend”s fast-approaching illiquidity may be responsible for limiting counter-trend sponsorship sustaining. But look out below if this morning”s Employment Situation report disappoints. And look out below if a favorable reaction to the report were to hold a test of Monday morning”s high. The most bullish intraday setup may be for a steep reaction down were to greet the open at or above yesterday”s low, instead of gapping under it. With liquidity quickly evaporating into the afternoon, it will be difficult generating sponsorship to break free from the range if not already done through the open
First Trade…
Preliminary signals are not considered before Employment Situation reports.
Morning bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2082.25 | 2074.00 |
| …would target | 2087.00 | 2079.00 |
| Bias-down: under | 2070.25 | 2062.25 |
| …would target | 2063.25 | 2055.00 |
| Signal status: LATE NO-BIAS, TESTED BIAS-UP 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.
The inverted session-long rally is
The inverted session-long rally is expected to follow the session-long decline”s template. Which Wednesday”s pattern did, until it didn”t. Each timing window was probing the prior timing window”s low, until the final hour. Instead, perhaps due to last-minute optimism ahead of the Employment situation report, Wednesday”s last timing window bounced. More so, it bounced back above the bias environment”s high.
That”s not a doubly-inverted setup. No such thing. But it also hasn”t necessarily abandoned the session-long decline template. A lot of effort goes into a session-long setup, and a lot more effort goes into inverting it. There is is still a proxy for reinstating the session-long decline.
Specifically, gapping open Thursday back under Wednesday afternoon”s low would fulfill the session-long decline template.
Why would that be relevant beyond validating the prior setup? Because the successful session-long setup tends to extend through the following morning. So, gapping down 11-12 points Thursday, under Wednesday afternoon”s ~2060 low, would be likely to trend lower through the morning. After three consecutive 15-20 point opening gaps, 11-12 points seems amateurish.
But, wait, there”s more… Wednesday”s final hour didn”t just avoid probing lower, but it also trended up. Having trended up into the close, gapping down under the prior afternoon”s low would form a session-long decline. So, extending down through the morning would be only the beginning.
Meanwhile, the 3-day holiday weekend indicator did not trigger. But its proxy could trigger a late bullish signal by gapping up Thursday 12-13 points to probe above Monday morning”s 2082.50 high. That would help to influence only a bullish afternoon, and not necessarily the morning.
Details were reviewed during the post-market Tour recorded here:
https://roddavid10.mitel-nhwc.com/join/yptxkwj
And here are the links to view the chaRTroom overnight:
XP-Friendly: https://www.anymeeting.com/240-776-009
xp UNfriendly: https://roddavid10.mitel-nhwc.com/join/shkphyy
Pre-close view… Two inversions don’t make a right.
Slow-playing the last downleg.
Probing fresh session lows into and out of the noon hour reached 2060.75 before bouncing back 6 points. The bias environment;s fresh low at 2059.75 has bounced back 6 points, too.
Now the final hour has begun. The session-long decline”s template — which we”re tracking since having inverted the open”s session-long rally setup — should drop at least 6 points to fresh session lows. Back under 2064.25 and 2063.00 would signal the break underway.
Developing exclusively in positive territory doesn”t undermine the session-long decline template. It might speak to any potential follow-through tomorrow. But so long as 2066.00 continues holding as resistance or recaptures any momentary probe above it, the template remains intact.