Posts by Rod David
Post-open Review… Anchoring.
Gap up extends through relevant window.
Having failed to gain traction yesterday, resuming the rally this morning required gapping up. 
Bottoming was already sufficient to have ended the 2-week old pullback and backing-and-filling was sufficient to have formed a base. So, the rally was likely to resume today, making the open likely to gap up.
Which it did, decisively, 5-points above yesterday’s 2900.00 high. Halfway through the opening 15 minutes of volatility, not yet rejecting the gap up, post-open action surged. It easily exceeded the 2905.75 bias-up target to renew the bias-up signal.
The renewed bias-up target is 2915.50 which was ultimately attacked up to 2912.00. China trade news has triggered a knee-jerk reaction down to 2906.00 that has extended lower to test 2902.00. Back above 2905.50 would signal that the rally had resumed.
A slightly deeper pullback is possible while still being likely to recover. Preferably and usually, at this “obvious” stage of the recovery, optimism will prevent touching yesterday’s 2900.00 high. Any lower would undermine the recovery — probably not at risk of reversing momentum down, but inserting another round of backing-and-fillnig.
The First Trade & Pre-open Tour Recording… Flat-to-flat-higher.
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…
Wednesday’s open had held a test of the 2893.00 earlier overnight low (basis Dec), which avoided a bearish morning since overnight action had probed Tuesday’s high. But it didn’t prevent triggering the 2889.50 bias-down signal, or quickly fulfilling its Its 2884.00 bias-down target. But avoiding the bearish setup should have been as bullish as it would have been bearish. That was demonstrated by only a temporary surge to 2900.25 which was only a knee-jerk reaction to a headline. And it was retraced entirely back down to its 2888.00 origin. The close recovered 2894.00-2897.00 — still the highest close in a week, but buyers didn’t gain traction for their efforts.
Overnight action’s new info…
Initially reacting down to 2891.00 and eventually down to 2890.00, overnight action has otherwise ranged choppily. Yesterday’s late 2897.25 high was finally pierced by a couple of ticks, and its 3-point reaction down to 2894.00 is recovering through yesterday’s high by several ticks up to 2891.00.
If, then… (notes to accompany the Tour recording)
[Reminder: The front-month rolls forward at this morning’s open to Dec which trades at a 5-point premium to Sep]… Having failed to gain traction Wednesday afternoon, resuming the rally without delay all but requires gapping up Thursday. Not already probing higher overnight would likely already be probing lower, and be more vulnerable to trending down. Overnight hasn’t probed a prior low nor touched its bias-down signal. The window only now is probing a prior high, which is still early enough to extend ahead of the open. Yesterday’s close was retesting the highest close in a week, “unfinished business” above at 2895.50 (basis Sep) was neutralized, and now both are being probed overnight instead of rejected — so, today is an excellent opportunity to end the 2-week old pullback, and not doing so would be bearish.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2901.50 would be likely to trigger the 2900.50 bias-up signal at 10:15. Exiting the open under 2898.00 would be unlikely to trigger bias-up.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2895.00 | 2900.50 |
| …would target | 2900.25 | 2905.75 |
| Bias-down: under | 2882.25 | 2888.00 |
| …would target | 2876.25 | 2882.00 |
| Signal status: BIAS-UP, BIAS-UP BIAS-UP TARGET EXCEEDED | . | |
| 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)
Did China steal another rally opportunity? Wednesday’s open had held a test of the 2888.00 earlier overnight low, whose break would have been bearish for rejecting the overnight probe above Tuesday’s 2893.00 high. Not fully forming the setup tends to be as bullish as it would have been bearish, but bias-down triggered in the morning, and quickly met its target.
Surging back up to the 2895.25 overnight high was triggered by a headline, and it was soon retraced to its 2883.00 origin. Wednesday didn’t feel very bullish — certainly not “as bullish as the open’s setup would have been bearish.” Such is the nature of artificial catalysts like headlines. They don’t complement organic sponsorship, but supplant it.
We can only assume that organic sponsorship had intended to resolve bullishly. Which can still develop. And having failed to gain traction Wednesday afternoon, resuming the rally without delay all but requires gapping up Thursday. Not already probing higher overnight would likely already be probing lower, and more vulnerable to trending down.
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 Sep Contract (EC, ETF: (FXE, UUP))
Breaking lower from the Symmetrical Triangle that was forming through Tuesday could extend 1.618 and fulfill the outstanding 1.1495 downside objective. But Wednesday tried breaking higher, or at least firmed to test 1.1650, and any higher would invalidate the downside potential.
Gold Dec Contract (GC, ETF: (GLD))
More narrow ranging overnight firmed later Wednesday morning and probed the 1209.50 buy signal. A second consecutive higher close would confirm a new rally leg underway. Otherwise, back under 1201.50 would resume the decline targeting 1172.50.
Silver Dec Contract (SI, ETF: (SLV))
Flat-to-lower ranging into Wednesday’s open was recovered to attack the 14.33 buy signal. It didn’t trigger, but breaking higher Thursday morning would be credible for extending higher intraday, and potentially launching a new rally leg.
30-year Treasury Dec Contract (US, ETF: (TLT))
Gapping up slightly Wednesday only ranged narrowly sideways, without rejecting the ongoing decline of lower lows and lower highs.
Crude Oil Oct Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Already greeting Tuesday’s API from a position of strength enabled a post-close surge that extended higher Wednesday morning in reaction to EIA. The week-old gap up to 71.20 was filled to neutralize its attraction. The 71.40 overnight high preceding it was only attacked and is still likely to be retested.
Natural Gas Oct Contract (NG, ETF: (UNG, UNL))
Wednesday’s second consecutive higher close following Monday morning’s fresh pullback low now suggests a bottom is forming. Surging Wednesday morning to the 2.87 buy signal reacted down, but retesting it Thursday morning would be likely to extend higher since the EIA report is being greeted from a position of strength.