Posts by Rod David

Closing surge makes a bottom seem inevitable.

Emphasis on the word “seem.” Firming intraday Friday waited until very late — essentially, until I had posted Daily Spot — before surging another $2 to test 48.00 resistance. 

Price action already had been constructive to forming a bottom by consolidating back up to 46.25 resistance. That was sufficient to prove the level”s relevance.

Inflecting into a $2-surge through it can prove its relevance, too.

The late surge does not inform the pattern. Closing at 48.00 resistance after testing it is no different that closing at 46.00 resistance after testing it. The extra $2 doesn”t make a retracement any likelier than it makes momentum likelier to extend higher.

But the extra surge to the extra resistance does require the prior resistance to hold as support. Now, closing under 46.00 would signal a new downleg underway. Otherwise, after two breakout attempts failed to launch downlegs when they weren”t confirmed the following day, extending above 48.00 should seal a bottom.

Headline”s reaction reacts.

The surge into the noon hour touched at 2010.00. Its reaction down into the bias timing window touched 1998.00. Its reaction up avoided triggering the 1999.25 bias-down signal, while extending to 2005.00.

This being a no-bias environment, the bias signals should define either end of the range. The 2007.00 bias-up signal need not be tested, but its test should ultimately hold — at least, until the bias environment begins lapsing at 2:30. Then fresh session highs would be possible, but I”m not expecting that.

Similarly, the bias-down signal can be broken when the bias environment”s end comes within view 10-15 minutes earlier. And now a 7-point bounce has created room for drifting back down for a half-hour, until the bottom can drop out.

The reaction up from 1996.00 to 2004.00 resolved down to a fresh low at 1993.25. The bias environment exit ranged choppily around 1996.00. An 11-point surge from 1994.00 entered the noon hour attacking 2006.00. That has improved to 2010.00.

The surge”s catalyst was a headline that lowers the Grexit threat. It”s no more than a headline, but it”s getting a big reaction. We can give it a benefit of the doubt so long as pullback limits hold — which they essentially have since triggering a buy signal at 2000.00. 

But the surge”s timing is principally similar to the open”s surge. That, too, extended a lot initially, and then extended further after only a shallow consolidation, also during a timing window that is vulnerable to counter-trend moves.

Having failed to exploit yesterday”s bullish Pivot Reversal this morning, the setup can invert to being bearish. Potentially very bearish, considering the weekend”s impending illiquidity, and the nearby well-worn support. Also, no more “lower prior highs” are available for another fresh low to bounce off of — there are only prior lows, and their reactions tend to be temporary.

Triggering bias-up would suggest another bullet had been dodged. Range-bound Friday afternoons aren”t unusual, but this isn”t a usual environment.