Posts by Rod David
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))
Gapping up slightly Thursday was reversed down sharply in reaction to the ECB QE news. Falling back to 1.1525 critical support failed to hold, and instead broke sharply through it to 1.1367. That”s a breakout, and a second consecutive lower close on Friday would confirm. Even avoiding confirmation would not prevent probing fresh lows next week.
Gold Feb Contract (GC, ETF: (GLD))
Wednesday”s night”s drop to 1279.00 filled the gap back to Tuesday”s close, and recovered back above 1287.70 before Thursday”s open. Probing fresh high above 1307.00 is still likely to test 1310.00.
Silver Mar Contract (SI, ETF: (SLV))
Wednesday night”s dip to 17.90 filled the gap back to Tuesday”s close before recovering Thursday to test Wednesday”s opening gap above. All nearby attractions are neutralized. But Wednesday”s 18.49 high was narrowly avoided, pessimism that is potentially bullish from a contrarian perspective.
30-year Treasury Mar Contract (US, ETF: (TLT))
Wednesday night”s dip to 147-12 reacted up sharply in reaction to the ECB QE news, back through 148-23 and 148-14 to 149-28. The close had fallen back under 148-14, a second consecutive lower close that confirms Wednesday”s breakout, and which requires at least one more eventual lower close.
Crude Oil Mar Contract (CL, ETF: (USO))
A bounce up to the 49.00 before Thursday”s ECB QE was rejected sharply intraday, fueled by large inventories reported by EIA. The decline”s lowest target at 46.25 (actually, noise under the 47.80 target) was tested and retested. It, ultimately held through the close, but the base must launch a rally before entering the noon hour if a new downleg is to be avoided.
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
The reaction to Thursday”s EIA report triggered a probe to fresh lows at 2.77. The close was probing back above 2.79-2.82 prior lows — still overlapping and not necessarily recovering. Back above 2.86 and 2.98 would trigger a bounce targeting 3.11, with potential to become much more.
Right to resistance.
Next higher target met. Already.
The bearish resolution was delayed until testing higher highs at 2059.00. It was pierced by 1 tick 20 minutes ago, after the bias environment”s 2043.50 bias-up signal held as resistance for long as was required. And not a minute more.
Persistently overbought 3-minute RSI has left overbought territory. A pullback has room down to the 2048.00 area. Higher highs could be limited to 2061.25.
Regardless, this afternoon”s buyers gained traction for the efforts. Fresh highs tomorrow are likely if the open doesn”t gap down too deeply.
Ugly duckling watch… where’s the swan?
Did this morning”s swoon dodge a later downdraft?
Two premises greeted today”s ECB news. First, that its favorable reaction would be very productive. And second, that the reaction would ultimately be reversed back under last week”s lows. Whether peaking this morning or next week, the next leg would return it all and more.
ECB news, check. Favorable reaction, check. Very productive, check… Reversal down, check already?
True, the reversal down was substantial, but it was also recovered entirely, and quickly. That suggested the rally had smartly shoved its correction into a timing window that could be absorbed easily. The bearish resolution was at least delayed until testing higher highs at 2059.00.
That was this morning. Now 3-4 hours later, the market has only ranged sideways through the noon hour and a no-bias environment.
The bias environment is now lapsing. Its 2043.50 bias-up signal had held as resistance, and is now being probed. There is no bullish reason to further delay extending higher. Back under 2041.50 would start to signal the bearish potential remains intact.
Regardless of which direction is underway into the final hour, it should be aggressive — steep, and substantial.
Look ahead: Economic Calendar – for Fri Jan 23 2015
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: The week”s parade of housing sector data is capped off by Friday”s post-open report. It”s influence on price action depends on its divergence from earlier data. Of higher profile is the LEI that will be released simultaneously.
Existing Home Sales
10:00 AM ET
**Leading Indicators
10:00 AM ET
Afternoon bias
| THU afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2049.50 | 2043.50 |
| …would target | 2054.50 | 2048.50 |
| Bias-down: under | 2041.00 | 2035.00 |
| …would target | 2035.50 | 2029.50 |
| Signal status: NO-BIAS | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
1. At 1:20, 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 1:20 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 1:20 would invoke a grace period through 1:30 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 1:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.