Posts by Rod David
Side-B of Thursday”s post-close Market
Side-B of Thursday”s post-close Market Wrap recording has one of my favorite tracks.
https://roddavid10.mitel-nhwc.com/join/vsmpxyv
Morning bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2030.25 | 2023.50 |
| …would target | 2035.75 | 2029.00 |
| Bias-down: under | 2015.50 | 2008.75 |
| …would target | 2007.75 | 2001.00 |
| Signal status: BIAS-DOWN, TESTED 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 1/30
If Thursday”s Pivot Reversal doesn”t extend the recovery immediately… then it”s a failed setup. A failed setup, after fully forming, typically becomes as bearish as it had potential to be bullish..
Pattern points… (Setups and technicals)
Thursday”s recovery was a thing of beauty when it came to both fulfilling and trapping sellers. Wednesday”s sellers got control of Thursday morning”s bias environment, during which they held tests of lower targets. But their timing had already suggested they were weak-handed sellers that wouldn”t gain traction.
That”s half the equation to a recovery — fulfilling and trapping sellers.
The other half of the equation is to reverse the trend back up, and we had to give buyers leeway for that. The afternoon”s rally was still overlapping the relevant level when it was time to override the no-bias signal, but we trusted it and it extended 18 more points anyway. Extending high enough could have overridden the late start, the relevant level was once again being overlapped when exceeding it would have been decisive.
Finally, the recovery did extend a lot, as was expected if the recovery happened at all. But it stopped a little short of touching its minimum objective. At least the minimum objective wasn”t tested and rejected. And at least the morning”s high was exceeded, which formed a bullish Pivot Reversal setup.
But Friday”s open must still prove that Thursday”s upward momentum has gained traction, and not just refueled sellers. If sellers are refueled, then they”ll be happy to soon learn that support has been chipped away.
What”s Next… (Outlook and opportunities)
This being a Friday, the morning”s bias signal tends to persist through the noon hour. Trending is difficult to begin, and more difficult to stop.
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))
Thursday”s narrowly ranging session created no signal. Bottoming still gets a benefit of the doubt, but there is currently no signal either way.
Gold Feb Contract (GC, ETF: (GLD))
Gapping down Thursday to 1271.00 and extended down to 1255.00, losing $33 intraday, makes the topping pattern unlikely to probe a fresh high before the downleg begins. This IS the downleg. A second consecutive lower close Friday would confirm at least 1229.00 is in-play, if not also the 1190.00 area.
Silver Mar Contract (SI, ETF: (SLV))
Gapping down Thursday and extending sharply lower may fulfill the outstanding requirement to probe new lows, before neutralizing the recent high”s ineffectual pessimism. Closing back above 17.28 would put the high”s retest back into play.
30-year Treasury Mar Contract (US, ETF: (TLT))
Wednesday”s surge was corrected Thursday, but not rejected, and not confirmed. Gapping down left outstanding a retest of Wednesday”s 151-14 close. A fresh high remains possible, presumably visiting 151-28, before a reversal down would be credible. Closing under 149-14 would signal a reversal down underway already anyway.
Crude Oil Mar Contract (CL, ETF: (USO))
Thursday”s probe of fresh lows didn”t extend down. Wednesday”s close was still being tested at Thursday”s close, so Wednesday”s breakout was not confirmed. Again. That”s not a buy signal, and the sequence can repeat indefinitely, but it does undermine the decline”s momentum.
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
Thursday”s EIA report was greeted from the least strong position possible, while still having some strength. That didn”t prevent reacting down to a new low.. There is no immediate buy signal, and a second consecutive lower close would confirm a breakout..
Pivot Reversal setup has reached its “make or break” point.
Everything — with only one or two exceptions — is on-track for Pivot Reversal.
How are sellers marginalized? Let me count the ways…
Sellers were rewarded for having gained traction yesterday afternoon, by having control of this morning”s bias environment.
Their selling probed under the 1990.75 bias-down signal, despite having held it through 10:15. That was “no-bias trending,” which required a recovery.
Sellers satisfied selling pressure at the morning”s 2084.00 bias-down target, and came within 1 point of the room for noise under it down to 2081.00.
The bias environment exit tagged up at 1990.75, which allowed a durable downleg to launch, but the bearish opportunity was not exploited.
Are buyers gaining traction? That”s not yet clear, but it”s clearly being attempted…
Exceeding the 2000.00 bias-up signal through 1:30 would have invalidated the 1:20 no-bias signal, but 2000.00 was only being overlapped then.
The recovery has nonetheless extended another 8 points higher, which is 17 points above this morning”s recovered bias-down signal.
Here”s the two problems with a recovery: I”ve already mentioned the first, that the no-bias wasn”t clearly invalidated. I”ve been giving buyers a benefit of the doubt, but this afternoon”s rally might be no-bias trending, just like this morning”s temporary drop.
The other problem is that buyers have been well-rewarded, coming within 1 tick of the 2008.00 bias-up target. And that”s resistance, just like this morning”s 1984.00 bias-down target was support.
Forming a Pivot Reversal today — closing above the open”s gap up, after probing a new trend low intraday — would be bullish. Not also closing above 2020.00 would be suspicious.