Posts by Rod David
The First Trade & Pre-open Tour Recording… Only a pullback?
Proper context can start the day with a solid win and make all the difference.
DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A
Through the prior close…
Wednesday’s gap up soon stalled at 2698.00 instead of extending higher, let alone almost literally exploding higher. Which made the morning likely back-and-fill. It also made the open a position of strength likely to attract an eventual recovery. Backing-and-filling was testing 2684.00 when the first hour ended. Firming into noon greeted the embargo being lifted on Fed Chair Powell’s remarks. The reaction literally exploded higher to 2728.00 during the noon hour, trending up to 2745.00 during the final hour. The day began by testing ‘higher prior lows” from last Tuesday, and ended by attacking 1-1/2 week old highs.
Overnight action’s new info…
Shallow downtrending had dipped back to yesterday afternoon’s prior high down to 2734.50 before midnight. The downtrending has persisted down to 2728.75 — still just probing under yesterday afternoon’s prior high, but now also retracing 61.8% of yesterday afternoon’s last dip.
If, then… (notes to accompany the Tour recording)
Confidence that a bottom is forming isn’t nearly is high since yesterday’s explosion was delayed past the open. But the burden of proof was on sellers so long as yesterday’s open had gapped up to allow room for a morning dip, and the burden of proof remains on sellers despite the overnight dip. Last night’s relentless dip is vulnerable to reversing up as the overnight crowd covers, unless the open fails to recover from under a relevant support — relevant support has so far held at the 2728.75 61.8% retracement of yesterday afternoon’s last dip. There’s still room for noise below it on a retest, but its failure would reverse down intraday and potentially target “lower prior highs” at 2707.00.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2726.00 would be unlikely to recover the 2727.75 bias-down target at 10:15 and renew the bias-down signal. Exiting the open under 2731.00 would be likely at least to trigger the 2734.75 bias-down signal at 10:15. Exiting the open above 2740.50 would be unlikely to trigger bias-down.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2744.75 | 2744.75 |
| …would target | 2752.00 | 2752.00 |
| Bias-down: under | 2735.00 | 2734.75 |
| …would target | 2728.00 | 2727.75 |
| Signal status: LATE BIAS-DOWN | . | |
| NEW: BIAS VIDEOS… INTRO // EXAMPLE | ||
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.
Market Wrap (recording & summary)
Almost literally exploding higher post-open Wednesday would have made the morning likely to trend up, and for that to be the result of a durable bottom. The alternative was backing-and-filling, which was the resolution to not extending higher from gapping up. Which didn’t prevent exploding higher later — reflecting the same market conditions as were suspected at the open, but not assuring a particular resolution.
The short-squeeze into the close rallied 20 points up to 2745.00 during the final hour. This attacked the 1-2 week old highs, now likely at least to be probed. Regardless of that, reversing down would essentially target “lower prior highs” at 2707.00, holding its test to maintain the rally’s traction. Just extending higher is no less possible than was Wednesday’s final hour surge.
Confidence that a bottom is forming isn’t nearly is high as if the explosion weren’t delayed past the open. But the burden of proof remains on sellers, or else the trend remains up.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.
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))
Dipping just a little bit deeper Wednesday under Tuesday’s 1.1295 low down to 1.1283 wasn’t necessary to allow a credible recovery to begin. But it coincided with lifting the embargo on the Fed Chair’s noon prepared remarks, triggering a surge to 1.1400. RSIs had diverged positively at the low, so the burden of proof is now on sellers.
Gold Dec Contract (GC, ETF: (GLD))
Still needing a second consecutive lower close to confirm, Wednesday morning’s flat ranging spiked up through 1215.00 to attack 1228.00 when the embargo was lifted on the Fed Chair’s noon prepared remarks. Closing back under the 1220.50 sell signal keeps alive the potential for retracing the rest of the spike and resuming the decline.
Silver Dec Contract (SI, ETF: (SLV))
Gapping up Wednesday to 14.15 reacted eventually by spiking up to 14.35 as the embargo was lifted on the Fed Chair’s noon prepared remarks. Closing under 14.32 keeps alive the downside momentum, so that any initial weakness Thursday would be likely to extend down.
30-year Treasury Dec Contract (US, ETF: (TLT))
A muted reaction to lifting the embargo on the Fed Chair’s noon prepared remarks Wednesday continued hovering at or above the 139-22 sell signal that has held as support since first being tested Monday morning, becoming less likely to break lower.
Crude Oil Jan Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Wednesday’s inside day doesn’t undermine the potential for Tuesday’s gap fill of Friday’s low close to begin forming a durable bottom. The restrained optimism helps from a contrarian perspective to give any fresh low a benefit of the doubt for recovering to continue forming a bottom.
Natural Gas Jan Contract (NG, ETF: (UNG, UNL))
Firming Wednesday after Tuesday had failed to confirm Monday’s break was recovered through the 4.44 buy signal AND its 4.63 confirmation. The pullback is resolving up and targeting fresh highs above 5.00. This does qualify as greeting Thursday’s EIA report from a position of strength.
Mid-day Update… Late detonation.
Explosion higher confirms oversold, but doesn’t ensure extension.
Coiling through yesterday’s close had required the rally to almost literally explode higher at today’s open. 
Gapping up does not fulfill the characterization. So, the post-open touch of 2698.00 was reversed to attack 2684.00.
Bouncing 10-11 points into the bias environment lapsing suddenly exploded higher. A surge to 2719.00 has eked higher through the noon hour to attack 2728.00.
The catalyst was lifting the embargo on the Fed Chair’s noon prepared remarks. It was no longer the open, so the explosion doesn’t qualify for confirming the rally remains intact.
We can still give the rally a benefit of the doubt — the open had formed a position of strength that was likely to absorb the morning’s backing-and-filling, and the explosion seems to have lodged itself above the resistance of last Tuesday’s “higher prior lows.”
Meanwhile, a pullback would be attracted down to this afternoon’s 2696.00/2702.25 bias-up parameters, if not also to this morning’s 2688.00 bias-up signal that was probed during a no-bias environment.