Posts by Rod David
Market Wrap (recording & summary)
Thursday’s gap down formed a “session-long decline” at the open, one of the most productive ever. Every intraday timing window except the noon hour probed its prior timing window’s low. Until the final hour, which only ranged relatively narrowly sideways.
That second timing window’s exception isn’t common, but it’s not unusual. The next session then tends to compensate for the missing fresh low by gapping down under the prior session’s lows. That would confirm both the session-long decline, and the Ascending Triangle’s false break. Oversold RSIs at Thursday’s low would be neutralized, and oversold RSIs at the Triangle’s low would be in-play.
Thursday morning’s gap down also served as proxy to trigger a bearish WedEX. Its influence would be relevant Friday afternoon. Uh-oh…
Friday is October 19, which is the anniversary of the 1987 “Black Monday” crash. Friday, October 16, 1987, was also pretty ugly — down an almost unheard of 108 points. The week had been pretty ugly, too. And it was a fairly fresh decline.
Similarities to current price action abound. There’s no perfect algorithm, only common principles, and they’re all here. So, trending down sharply again into the weekend — back to last week’s lows — would be extra vulnerable to extending down sharply coming out of the weekend. But only ranging sideways Friday would still be vulnerable.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.
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 Dec Contract (EC, ETF: (FXE, UUP))
Wednesday’s gap down had trended down intraday, and now Thursday has trended down further to confirm the breakout from the multi-session range. Some obligatory support from the recent 1.1500 low being tested might produce a temporary bounce, but the trend has meanwhile reversed.
Gold Dec Contract (GC, ETF: (GLD))
Fresh relative lows under 1222.00 reacted back up into the recent range testing 1233.50. A bigger bounce still has room up to 1241.00 before reversing down, which the pattern is otherwise free to do at any time.
Silver Dec Contract (SI, ETF: (SLV))
Thursday’s fresh lows tested and retested the rising channel’s uptrending resistance as support around 14.60. Its break would next target the channel’s lower-end within currently coincides around 14.35.
30-year Treasury Dec Contract (US, ETF: (TLT))
The extended delay in breaking under the 138-04 sell signal had made it either less likely to break, or likely to recover a break. It was the latter, as Thursday gapped down to 137-24 and barely extended any lower before beginning a reversal back into positive territory, and back above 138-04. Back above 138-18 would target 139-26.
Crude Oil Nov Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Thursday’s gap down to fresh lows comes after Wednesday had already fulfilled the confirmed breakout’s minimum requirement for. Thursday’s bounce from gapping down was retraced entirely back down to the low. The trend remains down.
Natural Gas Nov Contract (NG, ETF: (UNG, UNL))
Gapping down Thursday back to the 3.25 sell signal extended through it to 3.20. A second consecutive lower close on Friday would confirm, but the trend does appear to be reversing down.
Mid-day Update… Nothing bullish.
FB, SLD, B-D, and more.
False Break.
Tuesday’s breakout from the Ascending Triangle above 2778.00 was likely to be a false break. It likelier objective at 2819.50-2823.00 held multiple retests through yesterday. 
An interim dip yesterday morning had stopped optimistically short of touching the Triangle’s upper-end. But now today’s 60-point drop is probing back into the Triangle down to 2756.50.
Session-long decline.
Price action into yesterday’s close had bounced, and the afternoon’s low had printed during the bias environment. So, gapping down to and/or through that prior low formed a “session-long decline.” The setup essentially says that all but one timing window will probe its prior timing window’s low. That exception is usually the noon hour, as it is today. The final hour should still probe under the afternoon bias environment’s low.
Bias-down.
The least influential, since its 2760.75 bias-down target is already met. And it’s being probed, which doesn’t contradict this being a bias-down environment. Having said that, exiting the bias environment above or below its already-met target would offer extra confirmation to the decline’s durability today.
Another ugly day tomorrow would be the closest analog to a 1987-style crash setup that we’ve seen in quite awhile. Not that a bounce Friday wouldn’t still be vulnerable, but extending down sharply Friday should attract more reinforcements than counter-trend sponsorship.
Look ahead: Economic Calendar – for Fri Oct 19, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Friday is the 31st anniversary of 1987’s “Black Monday” crash. The Friday prior to Monday was a record-setting decline, itself (that’s how my “Friday Factors” were born). The one scheduled econ report isn’t high-profile, so noon’s Fed speaker may get unusual attention.
Existing Home Sales
10:00 AM ET
*Raphael Bostic Speaks
12:00 PM ET
Baker-Hughes Rig Count
1:00 PM ET
Afternoon Bias
| THU afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2779.50 | 2781.00 |
| …would target | 2787.50 | 2789.00 |
| Bias-down: under | 2764.25 | 2766.00 |
| …would target | 2759.00 | 2760.75 |
| Signal status: LATE BIAS-DOWN, BIAS-UP SIGNAL TESTED | . | |
| NEW: BIAS VIDEOS… INTRO // EXAMPLE | ||
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.