Posts by Rod David
Good morning! Greece is the
Good morning!
Greece is the focus of discussions by Eurozone finance ministers, so we may as well cover the market in yellow felt as much as headlines will be hitting it back and forth. Chances for a deal are being downplayed, and Crude Oil is likely to dip until one is done.
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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…
Tuesday”s gap up was corrected during the morning”s bias environment, but there was nothing corrective after that. The rally resumed into the noon hour, and out of the bias environment, stopping short of touching Friday”s intraday high. The position-squaring window dipped, but the session still ended higher than Friday”s close. And the rally gained traction for its effort, exiting the bias environment above the noon hour”s high and entering the final hour even higher.
Overnight action”s new info…
After rallying 22 points from Tuesday morning”s low, a 5-6 point slide has kept overnight action trending down throughout.
If, then…
The overnight slide is attacking yesterday”s ~2057.00 bias environment exit. It can be probed without reversing the trend down, so long as the probe isn”t maintained through a relevant timing window. Limiting the pullback would likely probe fresh highs this morning, rewarding yesterday”s rally for having gained traction. This is developing against the backdrop of a Eurozone finance ministers discussing Greece. Like price action, headlines have been downplaying the potential for positive news. But that doesn”t prevent lower lows, even if only as a temporary detour to new highs.
First Trade…
Exiting the open at 9:45 above 2061.75 would be unlikely to trigger the 2059.50 bias-down signal at 10:15. Exiting the open above 2064.50 would be likely at least to test the 2067.25 bias-up signal.
Morning bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2072.25 | 2067.25 |
| …would target | 2078.25 | 2073.25 |
| Bias-down: under | 2065.50 | 2059.50 |
| …would target | 2059.50 | 2054.50 |
| Signal status: NO-BIAS, TESTED BIAS-DOWN SIGNAL | 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 2/11
If the Chartroom”s late outage ate the Market Wrap recording… then ask any questions in this post”s comments section. I”m in contact with the host now about resolving their issues.
Pattern points… (Setups and technicals)
Tuesday”s session was essentially the pattern that Monday could have been. Backing-and-filling through the morning, rallying through the noon hour, and retracing Friday”s losses.
Friday”s ~2068.00 highs weren”t tested. Had they been, then closing below them Tuesday would have been bearish. Instead, the rally”s patience keeps alive potential for extending higher.
Tuesday afternoon”s buyers traction for their efforts, which also keeps alive the upside potential. Exiting the bias environment above the noon hour”s high, and entering the final hour above the bias environment”s high, should reward buyers with control of Wednesday morning”s bias environment. Exiting the open under 2057.00 would suggest otherwise.
Exiting the open under 2053.00 could even trigger a “session-long decline” setup. I”ll review its parameters in the First Trade blog post if overnight action threatens it.
Otherwise, while a downdraft from higher levels remains possible, be careful being short. The template that we”ve been discussing since last week, which continues tracking, could probe new highs at a steep slope.
What”s Next… (Outlook and opportunities)
With a three-day holiday weekend around the corner, Wednesday”s close is similar to a pre-expiration WedEX signal. There are a couple of different conditions. But essentially, a fresh high close Wednesday that isn”t invalidated Thursday could keep alive the rally”s momentum into next week.
Stake claim… check.
Buyers have gained traction for this afternoon”s efforts.
Buy signal after buy signal has triggered this afternoon, ever since the morning”s drop held its 2044.00 maximum objective. Now 2065.50 is being tested by a breakout that began when the afternoon”s no-bias environment began lapsing.
Along the way, the final hour was entered above the bias environment”s high. And the bias environment was exited above the noon hour”s high. Buyers have gained traction for their efforts.
Today”s buyers are now due the reward of controlling tomorrow morning”s bias environment. That may begin by gapping down, which would be expected to recover so long as much stronger sellers aren”t retaking control.
We”ll discuss specific levels in the post-close Market Wrap. Meanwhile, there is no requirement to extend any higher today. Similarly, extending any higher today could be retraced.
But the bigger picture expectation remains intact, albeit one day delayed, for retracing Friday afternoon”s drop on the way to new highs.