Posts by Rod David
How did yesterday afternoon”s signals
How did yesterday afternoon”s signals facilitate the overnight drop? Could it possibly be done already? What if it”s not? If the body expends 80 calories expending a shot of Jack Daniels that has only 65 calories, then why am I not losing weight like crazy? Answers to most of these questions can be found in the recording of this morning”s pre-open Market Tour:
https://roddavid10.mitel-nhwc.com/join/wzczrmk
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…
Monday”s recovery didn”t gain traction for its effort, despite trending higher through the afternoon, and despite a late 10-point surge. The uptrend”s interim reactions down to higher lows had each prevented greeting key timing windows at a higher high. The late surge originated too late to be relevant, and probed a fresh high only after the cash session close. Additionally, its pre-close and post-close highs each coincided with resistance — 2050.50 the afternoon”s bias-up target, and 2055.00 had defined Friday”s intraday resistance. Oversold RSIs were left outstanding at Monday”s 2034.50 opening low.
Overnight action”s new info…
Having expended unavailable energy through Monday”s close, an overnight pullback became likely. Sideways ranging between 2052.00-2054.00 had already broken lower 3-5 points into Europe”s opens. A blip-up into the range was reversed as quickly, and much more substantially, just now touching 2040.00.
If, then…
Yesterday”s close surged to fresh highs despite the afternoon failing to gain traction. This was the basis for my warning Market Wrap warning about a likely overnight pullback. My likely objective was 2044.00, with potential to 2041.00. The lower objective as met only momentarily by a knee-jerk reaction to PG missing earnings, and perhaps also from MSFT gapping down under yesterday”s after hours dip. The overnight drop has probably extended too deep and too late for a recovery to gap up, so rallying this morning will depend on opening too low to attract new sellers. A lot of econ reports are on their way, which are likely to be a catalyst for more volatility. The overnight drop remains vulnerable to extending so long as 2044.00 isn”t recovered.
First Trade…
Exiting the open at 9:45 under 2041.00 would be likely also trigger the 2044.00 bias-down signal at 10:15. Exiting the open above 2046.00 would be unlikely to trigger bias.down.
Monday afternoon”s Market Wrap recording
Monday afternoon”s Market Wrap recording is right here:
https://roddavid10.mitel-nhwc.com/join/pcxyfyc
Morning bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2059.00 | 2053.00 |
| …would target | 2064.00 | 2058.00 |
| Bias-down: under | 2050.00 | 2044.00 |
| …would target | 2044.50 | 2038.50 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET EXCEEDED | 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 1/27
If Monday”s recovery had gained traction… then a shallow opening dip Tuesday could still be likely to recover. But buyers didn”t gain traction, despite the last-minute surge to fresh session highs, so any dip must be contained to overnight action, and recovered to gap up Tuesday, or else lower lows become likely.
Pattern points… (Setups and technicals)
Monday morning”s recovery from Sunday night”s gap down was far more predictive than was the afternoon”s attempt(s) to extend it. Expending too much buying pressure without gaining traction had reset the recovery for morning failure.
Indeed, the open did fall to 12 points under the pre-open high. But that was absorbed, and recovered entirely.
Lacking a sell signal or bias-down, the recovery was likely to extend. And it did, but not substantially. The balance of the session trended back up, making a series of higher highs and higher lows. Each leg overlapped the 2049.00 area, whose recovery through the open would have targeted 2061.50.
So, at least sellers did not gain traction. But neither did buyers, with the bias environment exit and final hour entry both contained within the noon hour”s range. A last-minute surge to 2054.00 may be in-line with the bigger picture, but its timing was not, so an overnight retracement to 2044.00 is possible in even the most bullish scenario.
What”s Next… (Outlook and opportunities)
Under 2041.00 would more likely extend down to test the oversold RSIs left outstanding at the morning”s 2034.50 low. Avoiding its retest Tuesday would all but require gapping up — and that might require recovering from an overnight dip to 2044.00.