Posts by Rod David
Market Wrap (recording & summary)
The present value of future cash flow is essentially the underlying guide to longer-term stock market trending. At the opposite end of the spectrum is be individual company earnings announcements, which can inhibit trending. But the latter is only momentary, and often ignores the earnings reaction by the reporting company’s stock. Earnings have more influence inhibiting price action before the announcement than after it. Earnings is otherwise irrelevant.
Except indirectly. Like now.
I’ve been revisiting a theme since NFLX’s earnings plunge, that FAANGs strong-handed sponsorship has stopped accumulating. They don’t have to become sellers for prices to drop, only stop pushing price higher or buying dips. Being leadership, the broader market initially reacts down. But often the stopped accumulation becomes rotation into laggards, sending the the market higher one more time.
AAPL’s post-close earnings were perhaps responsible for inhibiting Tuesday afternoon from extending the morning’s rally. Maybe it was responsible for retracing the afternoon’s 2824.25 bias-up signal test back down to 2818.00 (dropping to 2813.50 was due to the session’s second China trade talks headline). Surging back up to 2824.25 through the close was enabled by month-end portfolio positioning.
Extending higher through Wednesday’s open would all but confirm one more upleg is underway, targeting 2873.00. That will be difficult initially if AAPL misses, sending FAANGs lower again. Even then, as I describe during the Market Wrap recording, an initially favorable knee-jerk reaction by AAPL could fulfill upside targets and end the day reacting back down sharply.
Tuesday’s rally may have created enough room to absorb another round of selling pressure without reversing the trend down. But there is no bullish reason for Monday’s test of 2801.50 to even be attacked Wednesday.
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))
If at first… fail, fail again? Gapping up Tuesday to retest last week’s high up to 1.1790 was reversed back into negative territory. The 1.1725 buy signal held as support, but so did resistance. A fresh high would be highly reliable for extending, but not until then.
Gold Dec Contract (GC, ETF: (GLD))
Tuesday’s open filled the 1225.50 two-week old low’s gap down by $3, neutralizing its attraction below. Bouncing into the noon hour attacked 1238.00. Both a buy and sell signal were tested intraday. Closing at any time beyond either end of their range would be likely to extend in that direction.
Silver Sep Contract (SI, ETF: (SLV))
Tuesday’s volatiilty stopped short on its lower-end from neutralizing the gap down’s attraction at 15.25. Firming instead momentarily tested the 15.60 buy signal. Closing beyond either end of the range would be likely to extend in that direction.
30-year Treasury Sep Contract (US, ETF: (TLT))
Monday’s bounce firmed overnight to test the 143-04 bounce limit. The testing persisted throughout Tuesday, with only one early touch of the 143-12 buy signal’s resistance.
Crude Oil Sep Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Still not extending Sunday night’s rally Monday night, Tuesday’s open slid to fill the gap back down to Friday’s close. Its attraction below is neutralized, but until it’s also broken, the recovery could still reach 71.75. Otherwise, .
Natural Gas Sep Contract (NG, ETF: (UNG, UNL))
[Rolling coverage forward to August]… Once again probing slightly higher highs intraday has failed to close decisively above them,
Look ahead: Economic Calendar – for Wed Aug 1, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: It’s FOMC day, but also payrolls week, so jobs data take a higher profile. The pre-open ADP report offers an opportunity to gauge market anticipations. Meanwhile, any noticeable reaction to pre-open reports is likely to be duplicated in reaction to post-open reports. And there are 2-3 high-profile, reliably influential items scheduled. None of which includes the afternoon’s FOMC policy statement.
MBA Mortgage Applications
7:00 AM ET
*ADP Employment Report
8:15 AM ET
Treasury Refunding Announcement
8:30 AM ET
*PMI Manufacturing Index
9:45 AM ET
*ISM Mfg Index
10:00 AM ET
*Construction Spending
10:00 AM ET
EIA Petroleum Status Report
10:30 AM ET
*FOMC Meeting Announcement
2:00 PM ET
Afternoon Bias
| TUE afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2824.00 | 2824.25 |
| …would target | 2831.50 | 2831.75 |
| Bias-down: under | 2815.00 | 2815.50 |
| …would target | 2808.50 | 2809.00 |
| Signal status:NO-BIAS, TESTED BIAS-UP SIGNAL | FAQ | |
| Flowcharts: Bias-UP // Bias-DN 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.
Post-open Review… Head fake.
The “session-long rally” had rendered itself improbable before the open. Not for lack of proximity, as yesterday afternoon’s 2811.25 high had been tested, retested, re-retested, only to react back down to 2806.50. 
But greeting the open 3 points under 2811.25 without yet probing above it did not fulfill the spirit of rejecting yesterday’s late dip.
That’s too simple, so a headline entered the picture.
Spiking up to attack 2819.00 did create a gap up above 2811.25. But it had already become too late for new sponsorship to be considered as rejecting yesterday’s late decline. The headline (China trade talks resumption) was the spike’s catalyst, and its origin was likely to be retraced at some point.
Ultimately, 2811.25 maintained its recovery through the opening 15 minutes of volatility, but price did not trend up. The session-long rally setup was officially moot. The 2814.25 bias-up target was being tested at 10:15 to avoid renewing the bias-up signal. And the 2808.50 bias-up signal was eventually retraced.
There is no unfinished business or other attraction in-play for the duration of the bias environment. Its exit may be another story. Session-long rally is moot, but an upleg can still be launched. Similarly, breaking under 2808.50 as the bias environment lapses could probe under 2801.50, and lower.