Posts by Rod David
Post-open review
Lower open, on steroids, i.e. expiration.
The pre-open headline battles deposited the open at this morning”s 2090.75 bias-down signal. Its immediate reaction up to 2093.25 was reversed as quickly into a dive that touched the 2084.25 bias-down target.
Despite probing lower down to 2082.25, the bias-down target was recovered through 10:15. The bias-down signal was not renewed.
This is still a bias-down environment. At least, until it starts lapsing at 11:30, or until coming within 10-15 minutes of it starting to lapse. Bounces are possible, but less likely to gain traction. A retest of the low or its attack is likelier, potentially to be probed down to 2080.00.
Currently, a bounce just retested the open”s 2093.25 high while ranging around the 2090.75 bias-down signal. Extending the narrow range for another 20-25 minutes and then rallying could reverse to new highs. Rallying before then would be capable of extending, but not confidently.
By the same token, expending energy just to hover around the 2090.75 bias-down signal, only to start dipping again at 11:30, could trend down much deeper into the afternoon.
The dueling Grexit and anti-Grexit
The dueling Grexit and anti-Grexit headlines seem to be losing their impact, as the past two hours have been inundated with comments from Greece, the EU, Germany, the ECB, France, and again the EU and France. They”re being drowned out by expiration, and opening setups are discussed during the pre-open Market Tour:
https://roddavid10.mitel-nhwc.com/join/mjvkksy
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…
Thursday”s third consecutive lower open around 2089.50-2091.50 held its bias-down signal to put into play an offsetting test of the morning”s bias-up signal, which was fulfilled by rallying 12 points into noon. The noon hour”s drop ended the wide range, but the balance of the session was still choppy. The same relevant 2094.25-2095.50 area essentially defined the third consecutive session”s close.
Overnight action”s new info…
Drifting back down to 2092.50 bottomed into Europe”s opens. Firming to 2096.75 was soon explained by an anti-Grexit headline (Greece accepts most of the terms) whose reaction surged to 2098.50. It was corrected by pro-Grexit news (ECB preparing for Grexit) that retraced the surge and much of the firming down to 2094.00. Another pro-Grexit headline that soon followed (German-led bloc willing to accept Grexit) didn”t produce a fresh low. Only a much later delayed-deal headline triggered a break back to the 2092.50 overnight low, and than several ticks lower.
If, then…
Thursday”s lower open was a reaction to a pre-open surge, whose catalyst was an anti-Grexit headline. Its reaction”s catalyst was the requisite pro-Grexit headline. History repeats. Most opportunities are produced by the pattern repeating, and other opportunities arise when the pattern doesn”t repeat. Did the latter just happen? Reaction to the last headline (Germany: “Grexit, meh”) was relatively subdued and contained for awhile. The current fresh low”s catalyst spoke to a deal”s timing, and was neither pro nor anti-Grexit. If that”s at all predictive, then expiration”s opening bias can be up. Regardless, don”t forget there is no WedEX bias, only one item of “unfinished business above,” and a fast-approaching weekend of illiquidity. The template of probing fresh highs can branch more easily into rejecting fresh highs if fresh highs are probed early.
First Trade…
Exiting the open at 9:45 above 2098.00 would be likely also to test the 2099.75 bias-up signal. Exiting the open above 2101.50 would be likely also trigger the bias-up signal at 10:15. Exiting the open under 2089.00 would make the 2090.75 bias-down signal likelier to trigger.
Morning bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2103.00 | 2099.75 |
| …would target | 2107.25 | 2104.00 |
| Bias-down: under | 2094.25 | 2090.75 |
| …would target | 2087.75 | 2084.25 |
| 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 2/20
If Friday”s open were to dip… then it would be the fourth consecutive such open. Therefore, it would be unlikely to recover immediately like the prior three opening dips. Also there being three consecutive opening dips, Friday”s open isn”t likely to dip.
Pattern points… (Setups and technicals)
Thursday afternoon”s 2095.50 bias-down signal was probed during the noon hour, but a 4-point plunge, which ended within 3 minutes, and wasn”t probed any deeper. But it wasn”t recovered in time to avoid triggering at the bias environment”s entry. And it wasn”t recovered in time to be invalidated at the bias environment”s exit.
So, the bias-down wasn”t invalidated, and it”s target wasn”t met. But exiting the bias environment back AT 2095.50 does undermine the signal. Perhaps the 4-point plunge just knocked the wind out of the rally. Perhaps it was otherwise irrelevant expiration position-jockeying. I”m going to ignore it.
Three consecutive opening dips have been absorbed, and the last two barely pierced positive territory. That is not excessive optimism. Tuesday afternoon”s 2101.50 bias-up target remains outstanding as “unfinished business above.”
A downdraft is possible, but it would be unlikely to extend without first recovering to probe fresh highs. Meanwhile, fresh highs remain likely.
What”s Next… (Outlook and opportunities)
Friday”s expiration has several unique nuances. One is that trending through the opening 15 minutes is likely to trend in that direction through the day. Friday Factors will also apply, like the morning”s bias signal tending to persist through the noon hour.