Posts by Rod David
The First Trade… Range-bound and down.
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…
Ugh. Completely recovering from Tuesday night”s probe of fresh lows was predicted after the close. The 26-point drop to 2033.50 was several magnitude greater than the drop to 2054.50 I had anticipated, but still recovered. Perhaps it was the recovery”s size that inhibited it from turning positive at Wednesday”s open, let alone from trending back above Tuesday”s high. Wednesday”s open delivered another shock to the system by dropping 19 points. It ended quickly and was largely retraced, but the balance of the session ranged choppily sideways between 2045.00-2054.50, even by a last-minute surge to its upper-end.
Overnight action”s new info…
Wednesday”s last-minute surge to 2054.50 initially firmed a couple of points more. But that was reversed to begin trending back down to test the 2045.00 lower-end to Wednesday”s mid-day range. Current action is firming after having been ranging narrowly around 2045.00.
If, then…
Trending through the open beyond yesterday”s 2045.00-2054.50 range may be the only path out of its consolidation this morning. Those happen also to be this morning”s bias signals. The overnight dip can reflect caution, i.e. pessimism, which is potentially bullish from a contrarian perspective. That pessimism is ineffectual only so long as it holds the range”s lower-end, or recovers from probing under it to avoid triggering bias-down at 10:15. But the rally potential this morning probably requires triggering bias-up. Yellen speaks in a few minutes, after 24 hours of several other Fed speakers signaling their favoring a rate hike. More so than her actual comments, it is the eventual reaction to her comments — whether only trending up or down, or reversing from a blip-up or blip-down — can dictate whether the market has yet discounted or dismissed a rate hike.
First Trade…
Exiting the open at 9:45 above 2050.50 would be unlikely to trigger the 2045.00 bias-down signal at 10:15. Exiting the open under 2042.00 would be likely to trigger bias-down. Exiting the open above 2057.50 would be likely also to trigger bias-up.
Morning bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2062.25 | 2054.50 |
| …would target | 2068.00 | 2060.25 |
| Bias-down: under | 2052.75 | 2045.00 |
| …would target | 2046.75 | 2039.00 |
| Signal status: BIAS-UP, BIAS-UP TARGET EXCEEDED | 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.
Extending under Tuesday”s low would
Extending under Tuesday”s low would have targeted 2054.50 overnight, and could have recovered from there through Wednesday”s open. Trending up above 2064.00 through Wednesday”s open would have reversed the trend up. It still may.
Tuesday night”s drop was 20 points under 2054.50. Wednesday”s post-open dip was almost 15 points under 2054.50. After reacting up, Wednesday”s session bounced twice to 2054.50. Was Wednesday”s market suppressed only temporarily by the overnight shock?
Opening Thursday above Tuesday”s 2060.50 could reject Wednesday”s probe under it, and extend higher aggressively. But dropping back down to Wednesday”s 2045.00 lows would be suspicious. Breaking under them would be bearish.
Here”s the post-market Wrap recording:
https://roddavid10.mitel-nhwc.com/join/zvswjvz
Pre-close view… Blip, dip, and flip?
Overnight recovery didn”t stick, and no other is being tried.
Recovering most of the open”s plunge this morning left a choppy, sideways range. The noon hour”s dip to 2046.50 reacted up to 2054.50 resistance. Retesting 2064.50 a couple of times this afternoon has just reacted up to 2052.00.
It”s all just ranging around 2054.50. That”s last Friday”s “lower prior high.” At least, it was lower yesterday, and it was the next objective under yesterday”s range. Now it”s resistance, and either way it is influential.
Breaking under 2046.50 earlier would have targeted fresh lows at 2039.00 or lower. The delay”s pent-up buying pressure just surged to 2052.00. That was probably just to stretch the rubber band, which is now snapping back down to attack 2048.00.
Closing under 2046.50 would make a hold-short compelling. Otherwise, it”s all just noise.
Daily Spot… Everybody bounce.
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))
Gapping up Wednesday delayed the pattern”s requirement for an eventual third lower close. Although 1.0855 wasn”t recovered, there is room up to 1.0900.
Gold Jun Contract (GC, ETF: (GLD))
Wednesday”s rally probed above the 1194.00 buy signal to test 1208.00, next targeting a retest of last week”s highs above 1220.00.
Silver May Contract (SI, ETF: (SLV))
Having fulfilled its 16.45-16.60 pullback objective before Tuesday”s open, Wednesday rally isn”t yet reliable for extending higher without delay. Filling a gap without closing above it must be exceeded immediately Thursday to avoid a corrective dip.
30-year Treasury Jun Contract (US, ETF: (TLT))
Having failed for three consecutive days to break back under 163-08 support, there became much greater likelihood for a bigger bounce to stretch the rubber band first. Wednesday”s open tested its potential to 164-30/165-08, but then extended above prior highs to 166-11. Closing back under 164-30/165-08 would trigger a Double Top pointing down to fresh lows.
Crude Oil May Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Still not trending down overnight, Wednesday surged to a fresh high above the 48.75 buy signal, and through 49.55 to confirm a bounce underway targeting at least a retest of last week”s 51.45-52.50 highs.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
Wednesday finally produced the pattern”s required third lower close. Closing back above 2.64 would signal the downside momentum had lapsed.