Posts by Rod David
Post-open review
Bias-down target met, and held, but not rejected.
A funny thing happened on the way to rejecting the overnight dive. Recovering 2111.00 through 9:45 would have made bias-down unlikely to trigger. But bouncing 3 points into and out of the open only attacked 2111.00 to within 1 tick.
And then reversed down. Hard.
The potential for an 8-point rally back to last week”s highs became an 8-point plunge. This morning”s 2104.25 bias-down target was probed down to 2102.50, taking RSIs oversold.
Despite having missed the opportunity to renew the bias-down signal (by exceeding the target through 10:15) this is still a bias-down environment. Usually, holding a test of the bias-down signal does define the morning”s low, and sometimes also the session”s low. But, again, this is still a bias-down environment.
Exiting the bias environment at 11:30 back above its 2109.25 bias-down signal would be bullish. So bullish as to start anticipating a complete intraday recovery, and a complete intraday recovery would confirm new highs.
One alternative scenario is the “session-long decline” that barely missed triggering. The setup wasn”t optimal, because the open spent so much time ranging around yesterday afternoon”s low before extending lower. But unless its rejected no later than coming out of the noon hour — and preferably before entering it — much lower lows today would be likely.
The overnight dip had extended
The overnight dip had extended more deeply and steeply before we began today”s pre-open Market Tour. Yet, its sellers can still be absorbed and rejected by a recovery to new highs. If not, then a “session-long decline” would be the likelier alternative. Either way, today”s session is vulnerable to trending sharply instead of ranging narrowly. Details are in the recording:
https://roddavid10.mitel-nhwc.com/join/mjvwxym
The First Trade.
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 slide back to Friday”s 2100.75 low was already bouncing into the open. The morning”s extended it back up to the 2111.00 bias-up signal in time to invoke the grace period, and barely triggered late bias-up targeting 2116.00. The afternoon”s pullback to 2107.00 was recovered to within 2-3 ticks of the 2116.00 target, neutralizing its attraction.
Overnight action”s new info…
Monday morning”s highs around 2111.00 immediately attracted price back down. Ranging there sideways back to 2113.50 is finally trying to break, now piercing a fresh low at 2110.50.
If, then…
Retesting last Wednesday”s 2117.75 high today doesn”t require gapping up. Double-topping with last week”s high requires only that its test be overly-optimistic. Gapping up is the likelier scenario that would fulfilll the overly-optimistic characterization. But recovering to fresh highs after gapping down would be optimistic, too — then it would be overly-optimistic if reversed down in time to close back under prior highs, and especially back into negative territory where a bearish Pivot Reversal could form. Despite the overnight pullback, I”m anticipating it will be absorbed similar to yesterday”s pre-open weakness. Duplicating last Thu-Fri session-long ranging in negative territory isn”t likely at this stage, which means that the alternative to recovering would likely be trending down.
First Trade…
Exiting the open at 9:45 above 2111.00 would be unlikely to trigger the 2109.25 bias-down signal at 10:15. Exiting the open under 2106.50 would be likely to trigger bias-down.
Morning bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2118.75 | 2116.75 |
| …would target | 2123.75 | 2122.00 |
| Bias-down: under | 2111.00 | 2109.25 |
| …would target | 2106.25 | 2104.25 |
| 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.
Trading Plan for 3/3
If a top is forming… then its next high should be done optimistically. Overly-optimistically. And its reaction should be sudden, steep and substantial..
Pattern points… (Setups and technicals)
Ready to roll? How about, rollover? Monday morning”s rally proved that Thu-Fri sellers had expended all available selling pressure. Monday afternoon”s rally through Thu-Fri highs proved their origin would be retested, back at last Wednesday”s high.
One question is by how much, although that”s likely to be 2121.25 or 2125.00. Higher is plausible, but not as likely. Another question is what happens then.
The topping pattern assumes the high will be retested overly-optimistically. That means gapping up Tuesday, and then extending relentlessly through last week”s 2117.75 high before correcting. Each higher and higher high would define the reversal trigger.
Regardless of how last week”s high is retested, the rally can still gain traction and extend. A new high close could be confirmed to launch a new upleg.
What”s Next… (Outlook and opportunities)
Hold-long was considered at the close, which was testing the 2110.25 buy signal”s 2115.50 minimum objective. Extending higher shouldn”t probe under 2112.00,. and preferably not even touch it.