Posts by Rod David
The First Trade & Pre-open Tour Recording… Make it, or break it.
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…
Monday’s flat open deceptively seemed like a recovery, after having probed both bias-down parameters overnight. But that was too late to still be challenging positive territory. So the open’s blip-up to 2821.75 snapped back down through the noon hour to 2798.25. The pullback’s next lower objective at 2801.50 was met, and held as support through the close. Actually, 2801.50 was still being overlapped at the close, but not broken.
Overnight action’s new info…
Yesterday afternoon’s choppy ranging has only narrowed overnight. A very shallow upward tilt has gradually improved from 2803.00-2804.00 to touch 2811.00. Perhaps not yet actually improvement, and still little more than it is just noise. Or, anxiousness.
If, then…
Monday’s closing test of 2801.50 can still be rejected by proxy, if Tuesday’s open were to gap up above the prior high. That’s Monday afternoon’s 2811.25 high, currently being attacked. Avoiding fresh overnight lows isn’t necessarily stability, not without alternatively rejecting yesterday’s trend. Overnight action is close to probing 2811.25, but its recovery at the open would be more credible if already serving as support. And having trended down into Monday’s close, the setup would also trigger a session-long reversal. Shallower opening strength would remain vulnerable to another downleg targeting 2875.00-2881.00.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2811.25 would be likely to trigger the 2808.50 bias-up signal at 10:15. Exiting the open under 2805.50 would be unlikely to trigger bias-up.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2808.00 | 2808.50 |
| …would target | 2813.75 | 2814.25 |
| Bias-down: under | 2798.50 | 2799.00 |
| …would target | 2792.25 | 2792.75 |
| Signal status: BIAS-UP, BIAS-UP TARGET MET | 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)
Ultimately, Monday morning’s decline was not rejected by the close. Similar to Friday’s drop, which had also bottomed during the noon hour, the balance of the afternoon ranged sideways. But unlike Friday’s drop, Monday has left the decline with no room for noise below.
Either the extended pullback testing 2801.50 has expended all near-term selling pressure, or another 20-25 points lower is underway.
Already bouncing into Monday’s close would at least have signaled that 2801.50‘s leg was done. Instead, Monday’s closing action was overlapping 2801.50. Rejecting it’s test by proxy Tuesday requires gapping up above the prior high, which is 2811.25. That’s Monday afternoon’s high, and having trended down into Monday’s close, the setup would also trigger a session-long reversal.
Any shallower opening strength Tuesday would remain vulnerable to extending down to 2875.00-2881.00. Greeting Tuesday’s open in negative territory would already suggest the decline is extending down. In lieu of gapping up sufficiently, only an Isolation setup that temporarily probes fresh lows overnight would be credible for rallying Tuesday.
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))
Gapping back up to the new 1.1725 buy signal Monday extended quickly to touch the 1.1755 old buy signal. Closing above 1.1765 would help to confirm that last week’s pullback had reversed up, targeting 1.1850.
Gold Aug Contract (GC, ETF: (GLD))
Monday’s inside day avoided touching either the 1227.50 or 1217.00 buy and sell signals. Still not rejecting the dip into Friday’s open does keep live the downside momentum.
Silver Sep Contract (SI, ETF: (SLV))
Narrowly ranging Monday avoided touching either of the buy or sell signals at 15.60 and 15.40, respectively. Still not rejecting the dip into Friday’s open does keep alive the downside momentum.
30-year Treasury Sep Contract (US, ETF: (TLT))
Last week ended choppily within the range, which I pointed out was not to be confused with stability. Sunday night’s weakness extended to fresh relative lows. Monday’s gap down was retraced back up to prior lows, continuing the pattern of “ineffectual optimism” that has been bearish from a contrarian perspective.
Crude Oil Sep Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Friday’s dip to the 68.33 pullback limit was already resolving Sunday night — by firming, and then surging into Monday’s open through the 69.25 buy signal. Already testing 70.00 resistance still has potential up to 71.75 simply as a correction.
Natural Gas Sep Contract (NG, ETF: (UNG, UNL))
Gapping up another couple of cents Monday to 2.81 suggests the bounce is extending. There is no requirement to fulfill higher objectives, so not rejecting Monday’s higher close immediately Tuesday would make the rally likely to extend.
Post-open Review… Done? Or, done.
Is the recovery rolling over, or is its latest pullback ready to recover?
Extending down this morning was likely at some point to visit 2801.50. It was tested and retested at the noon hour’s 2798.25 lows.
Its reaction up didn’t avoid triggering this afternoon’s 2807.00 bias-down signal.
This being a bias-down environment hasn’t prevented bouncing to probe 2810.00. This being a bias-down environment, a retracement to at least 2807.00 will be required at or after the bias environment begins lapsing.
Extending this morning’s decline was no doubt a function of the FAANGS resuming their slides. And broadening out, as well. Recall my comments beginning with last week’s NFLX reaction, up to this weekend’s Saturday Review note: Their sponsorship is holding, not buying.
But the rest of FAANGs story is that rotation out of their leadership and into laggards often defines the market’s next upleg. Regardless of whether 2807.00 is retraced — and preferably it will be retraced — the slide into and out of the weekend has an opportunity to seal a bottom for that next upleg. Otherwise, back under 2805.00 could launch another downleg.