Posts by Rod David
The First Trade & Pre-open Tour Recording… Last gasp?
Proper context can start the day with a solid win and make all the difference.
DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A
Through the prior close…
The decline’s next lower objective at 2749.00 had been thoroughly tested overnight. But already rallying before Thursday’s open prevented the open from testing 2749.00. Which also prevented holding a test of 2749.00. Probing positive territory above Wednesday’s 2881.00 and 2892.50 cash session and futures closes peaked upon attacking 2799.00, reversing back down to 2749.00. But it was no longer the open, making its test less likely to hold. So, its reaction up to 2787.50 was reversed down to the next lower objective at 2721.00 and the room for noise under it down to 2712.00. Reaction to a China trade war headline bounced again to 2766.00 still closed back under 2749.00 at 2732.00 at the cash session close, and futures settled at 2745.50.
Overnight action’s new info…
Firming further after the futures close did extend back above 2749.00. Extending relentlessly through the intraday China headline’s peak at 2766.00 touched 2785.00 at Europe’s opens. Reversing from there was also relentless until testing the China headline’s peak down to 2764.00 — still above 2749.00 and well into positive territory.
If, then… (notes to accompany the Tour recording)
Closing under 2749.00 is relevant. If not rejected, then its next lower objective would be in-play. But already having tested its next lower objective at Thursday’s low, confirming Thursday’s close under 2749.00 all but ensures putting into play the next lower objective, which would overshadow this week’s decline. Oversold RSIs already requires retesting Thursday’s 2712.25 low. Neutralizing it before closing back above 2723.25 could be bullish, but not nearly as bullish as then closing back above 2749.00. Closing under 2709.00 would essentially open the floodgates. Rallying overnight to indicate gapping up above 2749.00 is a good start at rejecting Thursday’s close under it. Quickly reversing a swell of optimism at the open would suggest that buyers are expended. Meanwhile, having trended down into yesterday’s cash session close, maintaining a gap up above yesterday afternoon’s 2777.00 bias-environment high could form a session-long rally.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2780.00 would be likely also to exceed the 2773.00 bias-up target at 10:15 to renew the bias-up signal. Exiting the open above 2767.00 would be likely at least to trigger the 2752.00 bias-up signal at 10:15. Exiting the open under 2747.00 would be unlikely to trigger bias-up.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2748.50 | 2752.00 |
| …would target | 2769.50 | 2773.00 |
| Bias-down: under | 2718.50 | 2722.00 |
| …would target | 2705.00 | 2708.50 |
| Signal status: BIAS-UP, BIAS-UP TARGET MET | . | |
| NEW: BIAS VIDEOS… INTRO // EXAMPLE | ||
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.
Market Wrap (recording & summary)
If you liked the last two days…
Thursday ultimately closed under 2749.00. 
Being “lower prior highs,” it was the decline’s next lower objective. Regardless of bouncing from its overnight tests and late morning test, or even from its afternoon test, only closing back above it would indicate its support had held.
It didn’t.
Interestingly, the next lower objective under 2749.00 is 2721.00 with room for noise under it down to 2712.00. The afternoon’s 2712.25 low reacted up 54 points to 2766.00. It reacted back down to 2727.00, retracing the session’s last surge that had been triggered by a China headline.
Oversold RSIs already make the 2712.25 low’s retest likely. Closing under 2749.00 makes the low’s retest less likely to hold. Closing above 2749.00 still would have retested 2712.25, but from a position of strength. Regardless, oversold RSIs can be neutralized overnight, so that opening back above 2749.00 could form an Isolation setup.
Otherwise, retesting 2712.25 post-open would be likelier to break under 2709.00, which opens the floodgates. So, if you liked the last two days, and a retest of Thursday’s low on Friday or overnight isn’t immediately rejected, then you’re going to love the likely meltdown that follows into and out of the weekend.
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))
Thursday’s gap up probed an unfilled gap at 1.1645 momentarily before its retracement tested Wednesday’s “lower prior highs” down to 1.1605. Its reaction recovered 1.1645, so far holding a test of the gap and of its resistance. Almost any initial weakness Friday morning would be credible for extending down.
Gold Dec Contract (GC, ETF: (GLD))
Thursday’s gap up to the original 1209.50 bounce limit held up through the open and trended up intraday to test 1228.00. This is the highest levels since July, and makes the 1172.50 objective problematic. Much will depend on whether Friday produces a second consecutive higher close. Regardless, “lower prior highs” at 1209.50 will be difficult to break back under.
Silver Dec Contract (SI, ETF: (SLV))
Gaping up Thursday above Tuesday’s 14.45 high trended up intraday until filling the gap back to Friday’s 14.65 high. No “unfinished business” below is outstanding, so early strength or weakness Friday would be credible for extending in that direction.
30-year Treasury Dec Contract (US, ETF: (TLT))
Wednesday’s mixed signals were likely to first test 138-04 above before reversing to fresh lows under 136-26. Stock market continued weakness overnight motivated a bounce to 138-17. Its reaction down held 138-04 Thursday morning, before retesting the overnight high. Back under 138-04 would now target 136-26 and lower.
Crude Oil Nov Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Overnight follow-through of Wednesday’s break under the 73.90 sell signal reacted poorly to Thursday morning’s EIA report. Extending down to 70.90 also produced a second consecutive lower close to confirm Wednesday’s break. At least an eventual third lower close is now required.
Natural Gas Nov Contract (NG, ETF: (UNG, UNL))
Already greeting Thursday’s EIA report from a position of weakness, the open gapped down to the 3.25 sell signal and extended down to 3.15. That Its retracement ended back at or under the sell signal, needing a second consecutive lower close on Friday to confirm.
Mid-day Update… A floor?
Opening rally’s failure tests and holds relevant low.
The next lower objective after yesterday was “lower prior highs” at 2749.00. Its multiple tests overnight produced bounces to 2780.00 and 2799.00. And like earlier bounces, 2749.00 was retested again.
Did 2749.00 hold?
Testing and holding 2749.00 during the open would have formed a durable bottom. Isolating its test to the morning’s bias window is less optimal, but would have gotten a benefit of the doubt. Instead, the morning’s bias-down target was still being overlapped at noon. Trading decisively above 2749.00 would have been optimal, but it certainly wasn’t rejected decisively.
But, did 2749.00 hold?
The reaction extended up to 2787.50 during the noon hour. Bias-up wasn’t triggered, but neither was bias-down. Exiting the bias environment beyond either 2760.50-2791.00 signal would be likely to extend in that direction. Higher would be less optimal, but still credible. Otherwise, the decline is likely to resume, as early as today.