Posts by Rod David
Morning bias
| MON morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2060.75 | 2055.75 |
| …would target | 2066.00 | 2062.25 |
| Bias-down: under | 2048.75 | 2044.00 |
| …would target | 2044.00 | 2039.00 |
| 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 2/9
If the NFP reaction were initially down… then its recovery would have prevented the afternoon”s drop. The afternoon might have extended much higher already. And that optimism would be expended, instead of ending the week pessimistically discounting bad news..
Pattern points… (Setups and technicals)
The week”s pervasive optimism was identified throughout by the timing of its post-open dips that recovered to fresh session highs. Friday”s reaction to the Employment Situation report underscored that optimism. But despite trending down into the close, optimism”s back isn”t yet broken.
That”s the point of probing a fresh high — it creates room to absorb selling pressure without damaging the trend. And Friday”s probe of fresh highs held up well into the noon hour before reversing down. Through Friday afternoon. The least relevant window of the week.
So, Friday”s reversal down was substantial, and its sellers gained traction for their effort (exiting the bias environment under the noon hour”s low, and entering the final hour under the bias environment”s low). But the drop”s minimum 2044.00 target was met to within 2-3 ticks. The 2041.00 lower-end of the target range could or should be met, too. But until a relevant window breaks below it, last week”s rally is likely to resume.
Even then, not holding 2041.00 would target another 12 points lower. If the pullback must extend that deeply before resuming the rally. then its test should be well underway Sunday night. Any deeper pullback than that could prevent resuming the recovery, since new lows would be in-play.
What”s Next… (Outlook and opportunities)
The weekend”s Saturday Review begins at 9:30am ET, and I”ll send a reminder in the morning. Click here to log-in up to a half-hour before the event.
Friday”s post-close Market Wrap recording
Friday”s post-close Market Wrap recording is here. It”s a little brief, since we”re getting together again in the morning for the weekend”s bigger picture review:
https://roddavid10.mitel-nhwc.com/join/xmjpmwm
Daily Spot
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))
The reaction to Friday”s pre-open Employment report exploited Thursday”s failure to exceed the gap back to Tuesday”s close that it had filled intraday. Wednesday”s post-close dip under 1.1400 support had been probed down to 1.1395, but that became resistance during Friday”s reaction down that extended down sharply to 1.1315.
Gold Apr Contract (GC, ETF: (GLD))
Thursday”s choppy sideways ranging proved to be hesitation ahead of Friday”s Employment report, when the reaction plunged to eventually fulfill this leg”s 1231.80-1236.70 target. The target range was very influential once probed. The eventual 1185.00-1195.00 target remains intact so long as bounces now hold 1244.50-1246.00.
Silver Mar Contract (SI, ETF: (SLV))
Friday”s reaction to the Employment report plunged to and through recent lows to test 16.55. The interim high was very distributive, all but requiring this leg to extend. That would be suspect if not already extending further down through Monday morning.
30-year Treasury Mar Contract (US, ETF: (TLT))
Thursday”s 148-24/149-16 inside day proved to be only hesitation ahead of the Employment Situation report, which triggered a plunge to almost 147-00. An eventual third lower close had become required three weeks earlier, forecasting also that the interim rally to 158-28 resistance would fail. There is now no new requirement, unless Friday”s breakout were confirmed by a second consecutive lower close Monday.
Crude Oil Mar Contract (CL, ETF: (USO, UWTI))
With the rally being free to resume, Friday”s improvement above 51.50 resistance helps to confirm the recovery”s momentum remains intact. Not closing above Tuesday”s 52.85 close after filling its gap does make the pattern vulnerable to another downdraft. But any fresh highs Monday would be credible for resuming the rally.
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Closing above 2.70 is the nearest buy signal to be considered, so long as Friday”s close had left Thursday”s range. But too much of the session was devoted to ranging narrowly at the lows, so an immediate recovery Monday wouldn”t be credible.
Two-to-one, the ‘nays’ have it.
More paths down today than up.
So far, the splash of cold water has been only a splash. But the rally”s face should hang onto its towel.
There are two paths down this afternoon. One would be contained entirely within the bias environment. The other would hover under resistance to be postured for another round of selling when the bias environment begins lapsing.
If sellers were going to be contained to the bias environment, then its exit should be recovering a couple of resistance levels, back above both 2058.00 and 2060.00 (if not also 2062.00). But the bounce from 2052.50 has been hovering under 2058.00.
And now the bias environment is within view of lapsing 10-15 minutes out from 2:30.
Lower lows would likely target 2041.00-2044.00. At least. Any lower could get ugly. Otherwise, actually exiting the bias environment above 2060.00 (and very quickly also 2062.00) would at least avoid another downleg — and perhaps also at most avoid another downleg.