Posts by Rod David
Daily Spot… Something about Greece
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))
Gapping down on Greece”s weekend events fulfilled the minimum objective of testing the 1.1050 prior low. That was retraced entirely back into positive territory attacking 1.1300. That was a 61.8% swing into positive territory from the overnight low, suggesting an inflection point where either the recovery accelerates or else fails miserably.
Gold Aug Contract (GC, ETF: (GLD))
Gappiing up sharply Sunday night in reaction to Greece”s developments probed $4 above the 1183.70 resistance that has defined prior swings. Its complete retracement back to unchanged at 1173.50 bounced back into positive territory through the afternoon, retracing 61.8% back to overnight highs — but not yet invalidating the 1158.50 target that remains in-play.
Silver Sep Contract (SI, ETF: (SLV))
Sunday night”s gap up and follow-through were very shallow considering the reactions and other swings developing elsewhere on the Greece news. But that muted response is entirely appropriate for waiting out Gold”s deeper issues so that both can rally in unison. The afternoon”s dip back toward Friday”s low was essentially an inside day with no new traction.
30-year Treasury Sep Contract (US, ETF: (TLT))
Gapping up back above last Monday”s 149-24 close that had been recovered once was itself worthy of some follow-through. Gapping up also above what had been the 150-08 buy signal to a 4-point gain at 151-22 was difficult to maintain. In fact, it reacted down to 149-07. That was recovered to 150-26, where a second consecutive higher close above 150-08 would signal a new rally leg underway. It would get a benefit of the doubt, but still be suspicious if not also above 151-22 — and meanwhile, simply trending back down to 147-24 is likelier.
Crude Oil Aug Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
The ongoing retracement extended deeper at Sunday night”s open, still stopping short of forming any distributive pattern that would offer a sell signal and target. Still monitoring for a buy signal, which is unlikely the first day following a gap down.
Natural Gas Jul Contract (NG, ETF: (UNG, UNL))
Gapping up Sunday night helped to reject Friday”s retest of 2.77 support. But closing above 2.83 is still required to signal momentum actually reversing up. It was probed intraday by a penny, but still being overlapped through the afternoon.
Here’s the really scary part.
If this is the slope when central banks are defending…
The post-open immediate uptrend might have become bullish had it recovered 2080.00 instead of ranging around it. Refueling the open”s uptrend before meeting its 2082.25 target might have kept its momentum alive. Holding the 2073.00 preliminary level”s retest could have prevented resuming the overnight decline.
But here we are. Almost every recovery setup that I”ve described has been teased or tested, but never triggered. The consequence to failing any recovery has been to retest the 2054.00 overnight low, and probably also to probe it. And dropping 21 points from the post-open high has now come within 8 points of last night”s low.
It”s not Phd level analysis that the overnight rally was inspired by the Euro”s recovery. And it”s no secret that the Euro”s recovery was helped by central bank buying. The unknown is whether they”re still in there, buying.
Dropping relentlessly against strong-handed buying would be very bearish. It would also be very unusual, so let”s dismiss that possibility. What if so big a retracement has come by invitation? What if the “plunge protection team” and their like are stepping back to trap shorts? Smart, evil, or both, squeezing shorts can be effective. But this is a dangerous area to try holding.
For now, this is a bias-down environment whose 2060.25 target is in-play. New lows are in-play, too. But be prepared for a temporary counter-trend squeeze.
Look ahead: Economic Calendar – for Tue Jun 30 2015
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights:
I”m unable to locate specifics on the Fed”s Bullard speech Tuesday. He”s gotten a reputation for talking the market up when it”s at its worst, so I”ll keep looking. Fed Speaker Dudley probably precedes Bullard. Also relevant is the post-open PMI, which is released privately to its institutional, and discernible market reaction tends to repeat when released publicly several minutes later. Also, any sentiment it reveals tends to be repeated in reaction to other reports, like the Consumer Confidence number 15 minutes later.
James Bullard Speaks
?
William Dudley Speaks
5:35 AM ET
Redbook
8:55 AM ET
S&P Case-Shiller HPI
9:00 AM ET
*Chicago PMI
9:45 AM ET
*Consumer Confidence
10:00 AM ET
State Street Investor Confidence Index
10:00 AM ET
4-Week Bill Auction
11:30 AM ET
Afternoon bias
| MON afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2083.50 | 2075.00 |
| …would target | 2089.25 | 2081.00 |
| Bias-down: under | 2074.75 | 2066.50 |
| …would target | 2068.75 | 2060.25 |
| Signal status: BIAS-DOWN | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
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.
Post-open review… Different bat time, different bat channel.
Post-open action duplicates Globex open. Mistake.
Sunday night”s gap down immediately extended lower, and just as immediately began recovering. Overnight action is one big uptrend from 2054.00 to 2079.00.
That was the pattern that on Saturday I cautioned against forming post-open. Tracking it overnight made it all the more bearish to duplicate intraday.
Post-open action did it, anyway. While the preliminary 2073.00 level did hold as support, the opening 15 minutes of volatility trended up. And while the critical 2080.00 level was probed, the 2082.25 bias-down target was touched as resistance.
The consolidation off of 2082.25 was overlapping 2080.00. But the bullish scenario calls for a consolidation SUPPORTED by 2080.00. We can”t dismiss the under-performance, but we can keep the door open:
Rallying above 2080.00 after the top of the hour would be credible for extending higher. Exiting the bias environment above 2082.25 would be credible for extending higher.
This morning”s action could marginalize sellers by not recovering from a dip to 2071.75, but there would be no predictable path down, only the likelihood of retesting the overnight low and extending the decline.