Posts by Rod David
Market Wrap (recording & summary)
Overnight drops on macro economic news had every right to extend down Friday morning. Never retesting their lows intraday, holding its ground, probing their interim high… Apparently, the bearish downside catalyst doesn’t have much strong-handed sponsorship.
Those news items had every right to have caused a durable drop. Not extending, being absorbed, retracing entirely… all suggest the market is not inclined to decline. In fact, the Isolation setup formed by maintaining a recovery back above Thursday’s 2800.00-2800.00 lows through the open. The morning’s rally created room for the afternoon’s bearish WedEX to expend selling pressure without invalidating the Isolation setup. Which it barely did.
Apart from the bearish WedEX, Friday afternoon’s decline was probably attributable to headlines of Trump’s new sex (settlement) tapes. That news item has no right to cause a durable drop. Yet, its origin hasn’t been retraced. Not, yet. That can be neutralized by Sunday night strength.
Sunday night strength could greet Monday’s open gapping up — sharply — and not interfere with the WedEX’s bearish post-open influence. WedEX’s influence is only intraday. And having been influential Friday afternoon, Monday morning’s influence is often more pronounced. Then the afternoon would be free to continue fulfilling the Isolation setup and return to Wednesday’s highs.
Both the Isolation and WedEX setup could be simultaneously influential if Monday morning were only to range narrowly sideways. Invalidating either would require the morning to trend beyond Friday’s range.
Details and other markets coverage are discussed in the post-market Wrap recording here.
THE SATURDAY REVIEW LINK WILL BE EMAILED IN THE MORNING
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))
Narrow overnight ranging seemed unaware of China’s devaluation. But it eventually rallied, gapping up through the 1.1725 resistance’s buy signal that had only been touched Thursday. This fulfills the second consecutive higher close required to put into play a retest of the recent 1.1850 high.
Gold Aug Contract (GC, ETF: (GLD))
Dipping overnight to 1215.30 came within a dime of filling the gap back to Thursday’s gap down. That was close enough to react up into Friday’s open, which extended higher. Closing above Thursday’s 1229.60 high is close enough to signal momentum has reversed up. “Higher prior lows” to 1238.00 is a minimum upside objective. Regardless, an intraday test of 1215.20 would have been optimal, and still would be optimal to completing a durable bottom.
Silver Sep Contract (SI, ETF: (SLV))
The decline’s 12.25 target was retested overnight, filling the gap back to Thursday’s open. Already recovering into Friday’s open extended through Thursday’s 15.48 high which would be bullish if recovered through the close. Upside potential could easily test 15.78 regardless of the resolution.
30-year Treasury Sep Contract (US, ETF: (TLT))
Thursday’s fresh low was too brief to fulfill Monday’s “warning shot,” especially when the recovery once again stopped well short of rewarding its buyers. Narrow ranging through Friday’s open eventually broke sharply lower to fulfill the closes lower objective at 144-08. The fresh low close into the weekend suggests at least a temporary lower low Monday.
Crude Oil Sep Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
[Rolling coverage forward to Sep, which trades at a 1.75 discount to Aug]… Thursday’s recovery above its last relative high still needed confirmation from a second consecutive higher close Friday that momentum is reversing up. The early recovery was just enough, but never extended higher intraday.
Natural Gas Aug Contract (NG, ETF: (UNG, UNL))
Thursday’s knee-jerk reaction up had held the 2.78 resistance which Friday morning did test. Until that’s recovered, the pattern remains likely to resume its decline.
Mid-day Update… Paradigm shift.
Morning’s rally fulfills objective, in time for afternoon bearish influence.
Is this week’s WedEX influence bearish? We’ll soon see.
Holding the post-open test of this morning’s 2802.25 bias-down signal had put into play an offsetting test of its 2811.00 bias-up signal. Attacking it to within 3 ticks at this morning’s high neutralized the objective.
Friday morning bias signals tend to persist through the noon hour, which traded flat-to-lower. Its pullback held above the morning uptrend’s last relative low, so sellers didn’t gain traction for their effort.
But now it’s Friday afternoon. The bearish WedEX is in-play, and already 2803.50 has been touched. Of course, being the afternoon’s bias-down signal in a no-bias environment means 2803.50 should define the window’s lower-end. Which it is, so far, reacting up at least 2 points.
Lower lows should be contained above yesterday’s 2800.00-2802.00 lows to maintain the open’s Isolation setup. Probing much lower would suggest something more substantial coming.
Look ahead: Economic Calendar – for Mon Jul 23, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Neither of Monday’s econ reports has a track record for influencing price action, but each is high-profile enough that any surprising data would likely have an effect.
Chicago Fed National Activity Index
8:30 AM ET
Existing Home Sales
10:00 AM ET
3-Month Bill Auction
11:30 AM ET
6-Month Bill Auction
11:30 AM ET
Afternoon Bias
| FRI afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2810.50 | 2811.00 |
| …would target | 2517.50 | 2818.00 |
| Bias-down: under | 2802.75 | 2803.50 |
| …would target | 2797.25 | 2798.00 |
| Signal status: NO-BIAS | FAQ | |
| Flowcharts: Bias-UP // Bias-DN INTRO VIDEOS #1 and #2 |
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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.