Posts by Rod David
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…
Wednesday afternoon”s portion of the intraday slide measured 40 points from high to low. The 1996.25 cash session close was considered a hold-short, and the futures close extended down to 1991.25. Despite the final hour”s entry being within the bias environment”s range, sellers still gained traction because the 3:10-3:20 window trended down to fresh lows that confirmed the bias environment”s bearish exit.
Overnight action”s new info…
Initially bouncing through midnight to 1997.25 suddenly plunged to 1988.00. That was recovered by a fresh high at 1999.00. Its reaction down attacked 1991.25, but 1997.25-1999.00 attracted price right back up again. Now 1999.00 is being tested as support by a reaction down from 2003.00. That”s just within 1 tick of the resistance of this morning”s 2003.25 bias-up signal.
If, then…
One yesterday”s last critical observations was not to trust the bounce coming out of the bias environment. It had slowed the drop”s pace and was 10 points higher, but it had not recovered a prior high. The same can be said in principle about the overnight bounce. Sellers gained traction yesterday, so fresh lows are in store unless the open were to gap up above a prior high. And this overnight bounce is nowhere near a prior high. Gapping up might still be bullish if an intraday probe of fresh lows were recovered to close back above the open.
First Trade…
Exiting the open at 9:45 above 2007.00 would be likely to trigger the 2003.25 bias-up signal at 10:15. Exiting the open under 1997.25 would be unlikely to trigger bias-up. And exiting the open under 1986.75 would be likely to trigger the 1990.75 bias-down.
Morning bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2009.25 | 2003.25 |
| …would target | 2017.00 | 2011.00 |
| Bias-down: under | 1996.75 | 1990.75 |
| …would target | 1990.00 | 1984.00 |
| Signal status: LATE 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.
If you were a Market
If you were a Market Wrap recording, where would you be right now? Here:
https://roddavid10.mitel-nhwc.com/join/kfpsbzz
Trading Plan for 1/29
If not for outstanding upside attractions… then how much lower might the market be already?
Pattern points… (Setups and technicals)
Friday”s “unfinished business above” at 2061.50 is not an urban legend, but it may as well be. It wasn”t enough of a reason to avoid that afternoon”s sell-off, or Monday”s.
Tuesday night”s rally through 2044.00 had plenty of room to be retraced without momentum reversing down, and to still be able to resume the overnight rally intraday. And yet, the open took advantage of that room, and not politely.
There are many reasons why Wednesday”s decline was avoidable — those are essentially the oldest and newest. Yet, the decline kept declining, and declining. Getting to 1997.25 — and then 3 points lower reacted to 3 points higher — extending down lower suggests that there is no sponsorship for a recovery.
What”s Next… (Outlook and opportunities)
If that sounds scary, it should. Contrarians might be interested in knife-catching this, but I would want to see how a test of 1981.00 behaves first. Gapping up Thursday back above might be a start at rejecting the decline, even if only to retrace back to where the FOMC statement was made at 2022.00.
Lower highs, lower lows… that’s a trend.
More selling. Enough, yet? No? Fine.
The knee-jerk reaction to FOMC was a head fake up to 2031.00 that reversed down sharply to 2017.00, and has extended much lower to 2003.50.
3.-minute RSI has been approaching oversold territory, while 1-minute RSI almost diverged positively. It didn”t, but the low won”t require a retest without 3-minute RSI becoming simultaneously oversold.
None of which is bullish without price actually reversing up. By enough. Back above 2011.00 would be credible for triggering follow-through. No hold-long will qualify in this pattern, but some improvement would be possible.