Posts by Rod David
The First Trade… Extended correction, or ended correction?
Proper context can start the day with a solid win and make all the difference.
Enter the chaRTroom here
(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Monday”s pre-open recovery probed fresh highs up to 2101.25. Bias-up triggered late at 10:30, but was never any more productive than before then. Through this small opening drove a giant truck that trended down relentlessly to the afternoon”s 2085.25 low. Perhaps the truck was only relatively giant, since demand was relatively small — the afternoon bias environment”s exit under the noon hour low wasn”t so much confirmed, as it was not rejected. Ultimately, Monday”s drop held (barely, 3 ticks) above Friday”s confirmation session low.
Overnight action”s new info…
Strong-handed selling, or not, it has extended overnight. But not before retracing all of yesterday”s final hour drop from 2092.75, into and out of Europe”s opens. The only proximate cause for its peak seems to be Asian markets” weakness. Regardless, a much steeper downleg began that fell over 13 points in 90 minutes to 2079.25. It has since bounced back above yesterday afternoon”s 2085.25 low to unchanged.
If, then…
Weak-handed sponsorship can be productive during less liquid environments. That”s why gapping open from one relevant level to the next is often reversed immediately intraday. Having tested the next lower objective at 2080.00, which is also support from last week”s “lower prior highs,” a corrective drop may be complete. Opening back above yesterday”s lows would be an important first step to ending the correction, but still not enough. A brief post-open dip that avoids triggering bias-down would be credible to building a bottom, a little more so than would immediately extending optimistically higher. And not recovering a post-open probe under yesterday”s low would likely retest the overnight low down to 2076.00.
First Trade…
Exiting the open at 9:45 under 2082.25 would be likely also to trigger the 2083.50 bias-down signal at 10:15. Exiting the open above 2089.50 would be unlikely to trigger bias-down. The opening 15 minutes must be exited above 2096.00 before improving the potential to trigger the 2091.50 bias-up 30 minutes later.
Morning bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2098.25 | 2091.50 |
| …would target | 2104.00 | 2097.25 |
| Bias-down: under | 2090.25 | 2083.50 |
| …would target | 2083.00 | 2076.25 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET MET | 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.
I definitely underestimated the room
I definitely underestimated the room for a time delaying pullback. That”s different from a corrective drop, whose objective is to trap shorts and to refuel buyers, which would have been obvious coming out of the open. But Monday”s pre-open recovery surged through the open to probe a fresh high. Not exactly “end of the road” stuff.
In fact, the intraday drop did no damage to the rally”s chart. Its low didn”t even touch Friday”s confirmation session low. And it barely retraced 61.8% of a less relevant leg. The bias environment was definitely exited under the noon hour”s low, but the final hour”s entry and 3:10-3:20 timing windows were non-committal. So, sellers didn”t necessarily gain traction for the effort.
Despite not being sponsored by strong hands, extending the decline anyway would still target 2080 or 2076. Otherwise, being indicated to open Tuesday above 2089 and 2093 should be bullish.
Here”s the recording of Monday”s post-market Wrap:
https://roddavid10.mitel-nhwc.com/join/wzccrmk
Daily Spot… Euro trying to hold support.
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 Mar Contract (EC, ETF: (FXE, UUP))
Sunday night”s probe under the 1.0585 support didn”t recover before Monday”s open. Its bounce filled the gap back to Friday”s 1.0611 close, neutralizing the attraction above. Nothing inhibits extending down, but another bounce has room to 1.0650 before signaling momentum may be reversing up.
Gold Jun Contract (GC, ETF: (GLD))
Friday”s recovery of 1205.00 and test of 1208.50 was retraced Monday to test 1196.00. Not resuming the rally Tuesday would undermine whether the pullback had bottomed, or was even only a pullback.
Silver May Contract (SI, ETF: (SLV))
Perhaps this isn”t quite the albatross around Gold”s neck, but it didn”t even rally Sunday night while Gold was making an effort. Closing above 16.60 would signal the trend reversing up, but any shallower bounces would remain vulnerable to extending down.
30-year Treasury Jun Contract (US, ETF: (TLT))
It was premature for Monday to already probe lower after Friday”s 61.8% retracement of the Wednesday-Thursday drop .So, already probing lower to 162-28 Monday morning was soon recovered to range narrowly around unchanged. Back above 163-26 would undermine the decline”s momentum.
Crude Oil May Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Sunday night”s rally to 53.10 allowed room to absorb a dip Monday that fluctuated narrowly around unchanged. The 51.45 support held, so extending higher immediately remains possible.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
Last week”s confirmed breakout requires no lower close, but that didn”t stop Sunday night and Monday from probing lower. The session containing a new low can”t trigger a buy signal, but closing higher Tuesday could start to form another bounce.
Old habits are tough to break.
Another intraday drop… to refuel buyers?
Well, this sure looks familiar: early rally, retraced entirely, but holding a test of a prior low. Last week”s ranging made this a daily ritual — sometimes twice a day, and overnight.
Those eventually resolved up into Thursday”s breakout and Friday”s confirmation. Not to mention, this morning”s surge to fresh highs at 2101.25.
But the balance of the session has trended back down. This afternoon”s 2093.25 bias-down signal triggered, and its 2088.00 target has been met to within 3 ticks.
The bias environment is within view of lapsing at the bottom of the hour. Exiting it back above the noon hour”s 2093.75 low would signal the decline”s momentum had lapsed. Regardless, entering the final hour above 2097.00 would still signal momentum reversing up.
There is no requirement to extend down further, only vulnerability, which could extend down to 2078.00-2080.00 or lower.