Posts by Rod David
The reaction to this morning”s
The reaction to this morning”s Employment Situation report confirmed the prevailing optimistic sentiment, by spiking up above prior highs. Its follow-through may be confirming the optimism is reaching the end of its rope, since the bias-up target has been met. Specific opening action will likely tell us which way the market resolves today. Levels and behaviors are specified in the pre-open Market Tour:
https://roddavid10.mitel-nhwc.com/join/hthwhrz
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…
Except for a drop through the noon hour, Thursday”s session rallied higher through the day. And that followed gapping up to retrace most of Wednesday”s late plunge, which had extended even lower overnight. Although the bias environment exit and final hour”s entry reflected no momentum, the last half-hour surged to almost touch the 2059.00 upper-end to the ongoing channel.
Overnight action”s new info…
Thursday”s last half-hour surge was gradually retraced before midnight. That retracement was gradually recovered into and out of Europe”s opens. A shallower dip has been recovered, too, forming an Ascending Triangle with two hours still remaining before monthly payrolls is announced.
If, then…
The market”s underlying upward bias seems strong enough to absorb an initially negative knee-jerk reaction to this morning”s pre-open Employment Situation report. But it might not be strong enough to maintain an initially favorable reaction, since yesterday afternoon”s key timing windows lacked traction. The Friday Factor may be more relevant today than any other influence.
First Trade…
No preliminary levels are considered ahead of an Employment Situation report. These will be updated during the pre-open Market Tour.
The monthly Employment Situation report
The monthly Employment Situation report is just hours away, and behavior is optimistic. That”s potentially bearish from a contrarian perspective, but not always right away — and not always at a previous range extreme. They can”t make it too obvious for us. Here”s Thursday”s post-close Market Wrap for more:
https://roddavid10.mitel-nhwc.com/join/mjvfsbh
Morning bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2065.00 | 2059.00 |
| …would target | 2070.25 | 2064.50 |
| Bias-down: under | 2053.50 | 2047.75 |
| …would target | 2047.00 | 2041.00 |
| Signal status:BIAS-UP | 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 2/6
If this third visit to recent highs reacts down again… then is it likely to retrace back to interim lows? No. Having tested the area of Thursday”s high twice during the current multi-month channel, the only credible reaction down would come from a fresh high close. Dipping any earlier from any lower would likely retrace only a portion of the past week”s rally.
Pattern points… (Setups and technicals)
Two consecutive mornings Tuesday and Wednesday reflected accumulation that made their midday flat-to-lower ranging likely to resolve up. And despite Wednesday afternoon”s buyers not gaining any traction before probing higher, the post-close plunge was recovered anyway.
Now comes Thursday”s session, apparently trained to expect the afternoon probe of fresh session highs. The midday flat-to-lower ranging once again prevented buyers from gaining traction. But a very late effort extended higher.
The rally from January”s ~1980.00 low eventually targeted 2059.00. It was attacked to within 1 tick at Thursday”s late high. Hesitation there reflects pessimism, which is potentially bullish from a contrarian perspective. This doesn”t require trending higher without delay, but it makes an initially negative knee-jerk reaction to the Employment Situation report likely to reverse up.
What”s Next… (Outlook and opportunities)
Gapping down under Thursday”s 2048.50 noon hour low might be the only credible way to avoid fresh highs Friday. Fresh highs would be vulnerable to reversing down — earlier rather than later, if at all.