Posts by Rod David
The First Trade & Pre-open Tour Recording… Delayed, delayed FOMC reaction?
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 morning’s delayed surge up to 2826.00 was doomed to failure, on two counts. It was no-bias trending after failng to trigger the morning’s 2823.25 bias-up signal. And it was unlikely to attract sponsorship ahead of the afternoon’s FOMC event. But its reaction down was less inhibited, exceeding its 2815.00 target by 61.8% down to 2808.00. That wasn’t necessarily sponsorship, but gravity revisiting the range’s other end. And it helped to soften the blow, as a brief dip to 2805.50 stopped 1 point short of its potential, and bounced back up to 2817.00. But the bounce was otherwise unimpressive, and the close dipped back down to 2808.00.
Overnight action’s new info…
The last-minute dip was initially retraced back up to Wednesday afternoon’s bounce up to 2815.00. The afternoon’s low was being attacked by midnight. And probed ahead of Europe’s opens down to 2804.50. The trending has only extended — relentlessly — down to 2791.00.
If, then…
The overnight slide confirms yesterday’s conclusion: That the FOMC’s delayed knee-jerk reaction (is that a thing?) to within only 1 point of 2804.50, and the unimpressive bounce, had meant the morning’s slide didn’t discount the FOMC events enough. Or, that other events are still being discounted. Potential to retest 2801.50 remained alive. And there’s no bullish reason for that again, unless isolated. Overnight is one possibility, if the open has recovered back above yesterday’s 2805.50-2808.00 lows. Otherwise, the next lower attraction is the 2775.00-2781.00 area. And the next major observation is whether tomorrow’s Employment Situation report is being greeted from a position of strength, or weakness.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2797.50 would be likely also to exceed the 2801.50 bias-down target at 10:15 to renew the bias-down signal. Exiting the open under 2804.50 would be likely at least to trigger the 2807.50 bias-down signal at 10:15.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2815.25 | 2815.50 |
| …would target | 2821.75 | 2822.00 |
| Bias-down: under | 2807.25 | 2807.50 |
| …would target | 2801.25 | 2801.50 |
| Signal status: LATE NO-BIAS, TESTED BOTH BIAS-DOWN PARAMETERS | FAQ | |
| Flowcharts: Bias-UP // Bias-DN 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.
Market Wrap (recording & summary)
Wednesday morning’s delayed surge up to 2826.00 offered a high-probability short. No-bias trending above 2823.25 was already likely to fail, especially with the afternoon’s FOMC event inhibiting sponsorship. Its reaction’s 2815.00 target was exceeded by 61.8% down to 2808.00.
So, question: Was that defensive posturing successful to help absorb an initially negative knee-jerk reaction to FOCM? Price had only firmed into the FOMC, so optimism wasn’t excessive. A delayed reaction dipped to 2805.50, ignoring potential for another point lower before bouncing to 2817.00. So, short answer: The morning’s discounting helped.
Longer answer: It probably didn’t help enough. The afternoon’s recovery was unimpressive — perhaps inhibited by a White House announcement re:China that never materialized. Unlike Tuesday, 2817.00 was only touched and not recovered, which keeps the pattern vulnerable to dipping deeper. In fact, there’s already a 9-point drop into and out of the close.
Whether 2804.50 or a deeper probe under 2801.50, isolating fresh lows to the overnight could seal a near-term bottom. Gapping up above 2820.00 would be credible for extending higher, too — difficult, but credible. Meanwhile, Thursday’s close determines whether Friday’s Employment Situation report is greeted from a position of strength, or weakness, which could be a landmark for near-term direction.
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))
The reaction down from Tuesday’s gap up had held 1.1725 through the close. Wednesday resumed the decline to test 1.1700 before the FOMC news. That filled the gap back down to Friday’s close, where closing any lower would launch a new downleg. The immediate reaction bounce, avoiding the sell signal. Closing above 1.1740 would triggger a reversal.
Gold Dec Contract (GC, ETF: (GLD))
Another choppy directionless session Wednesday essentially tested both ends of its narrow range. The intraday test of 1227.00 was ongoing into the close, and reacted up later on the FOMC policy statement.
Silver Sep Contract (SI, ETF: (SLV))
Dropping back down to the 15.40 sell signalWednesday held as support through the close, and bounced slightly afterward on the FOMC policy statement.
30-year Treasury Sep Contract (US, ETF: (TLT))
Gapping down Wednesday to 142-14 was several ticks above Monday’s low. Probing it down to 141-27 was recovered back into Monday’s range. There is on unfinished business below if the trend wants to reverse up, which would be triggered above 142-26 and 143-02.
Crude Oil Sep Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Extending the reaction down from testing 70.30 tested prior lows at 67.50. Almost any strength Thursday would be likely to extend and at least retest Monday’s Island pattern, if not also probe it up to 71.75.
Natural Gas Sep Contract (NG, ETF: (UNG, UNL))
Already testing 2.76 continued testing it throughout Wednesday, neither extending down nor rejecting it. Closing any lower weould signal the trend reversing back down. Thursday’s EIA report is not being greeted from a position of strength.
Mid-day Update… FOMC ahead.
Have sellers discounted enough of a reaction?
No-bias triggered cleanly this morning. 
Attacking 2826.00 was required to retrace at least the 2823.25 bias-up signal. Anyway, its difficult attracting sponsorship ahead of FOMC policy statements. And the open’s congestion was already likely to attract price back down.
The reversal targeted 2815.00. It has extended down to 2808.00 at the noon hour’s low. Also probably not strong-handed sponsorship, but defensive posturing.
So, defensively postured enough? Has the drop discounted the potentially negative news, at least to soften its knee-jerk reaction and help 2804.50 hold as support? The 60-90 seconds following the news could be excused for a probe under 2801.50. An initially favorable reaction would itself need to be maintained, or else be vulnerable to testing 2804.50.