Posts by Rod David
The First Trade & Pre-open Tour Recording… No bargain, apparently.
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 bigger and bigger legs confirm that volatility remains very much alive. The overnight drop from Friday’s 2759.00 close had extended to 20 points attacking 2739.00. The morning’s 2746.25 bias-down target provided one last bit of post-open resistance to launch a 26-point plunge attacking 2720.00. Another bounce resolved down sharply, too, falling 27 points to test 2704.00 into the noon hour. One more 21-point drop during the afternoon bias environment retested the morning’s low down to 2700.50. Its reaction was the most productive, bouncing through the final hour back up to 2725.00 which overlapped the afternoon bias environment’s 2721.75 interim high.
Overnight action’s new info…
Monday’s intraday volatility continued overnight, albeit not at first glance. Ranging round Monday afternoon’s 2721.75 bias environment high persisted through Europe’s opens. No longer trending might seem non-volatile, but each interim swing has reached a higher high or higher low than its last. More so, Europe’s opens were greeted with a fresh overnight high at this morning’s 2728.25 bias-up target, and its reaction just touched a fresh overnight low at 2714.75.
If, then…
Yesterday’s final hour bounce had probed the afternoon’s prior high, and not just briefly. Closing above it was entirely possible, if the bounce’s buyers had been bullish. Apparently, the deep drop still wasn’t considered to be enough of a bargain. Since buyers didn’t gain traction, extending the late bounce without delay this morning would require gapping up. The decline is otherwise likelier to persist, which would also be much more credible this morning if begun without delay or by gapping down. Also considering the overnight volatility, early trending would be credible for extending.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2715.00 would be unlikely to trigger the 2713.00 bias-down signal at 10:15. Exiting the open under 2720.75 would be unlikely to trigger the 2722.50 bias-up signal.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2719.50 | 2722.50 |
| …would target | 2725.25 | 2728.25 |
| Bias-down: under | 2709.75 | 2713.00 |
| …would target | 2701.50 | 2704.75 |
| Signal status: BIAS-UP | 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)
The 20-point overnight drop from Friday’s 2759.00 close down to 2739.00 had bounced to attack 2748.00. Reacting down into the open blipped-up to touch the 2746.25 bias-down target’s resistance, and then plunged to attack 2720.00. Its reaction resolved down sharply, too, testing 2704.00 into the noon hour. Another bounce during the afternoon bias environment was reversed sharply to retest the morning’s low down to 2700.50.
That’s a lot of selling, even after the final hour bounced. The final hour’s bounce up to 2725.00 went out overlapping the afternoon bias environment’s 2722.00 interim high between the session’s two lows. That’s not a reversal, which it could have been. Since buyers didn’t gain traction, extending the late bounce without delay would require gapping up Tuesday. Meanwhile, the decline is likely to persist, which would also be much more credible if begun without delay or by gapping 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))
Dipping Sunday night back to Friday’s test of the 1.1700 sell signal was recovered to gap up Monday to test 1.1775. The sell signal could be raised to 1.1725, at least a preliminary signal that must still break under 1.1700 to reverse the trend back down.
Gold Aug Contract (GC, ETF: (GLD))
Monday’s shallow dip retraced 61.8% back down to Thursday’s low, which didn’t acknowledge the overnight low that had preceded it. This qualifies as “ineffectual optimism” which is tends to be more bearish from a contrarian perspective.
Silver Jul Contract (SI, ETF: (SLV))
Having held Friday’s test of its 16.45 bounce limit, drifting lower Monday helps to confirm resistance held. But closing lower on Tuesday is still needed to signal the decline has resumed.
30-year Treasury Sep Contract (US, ETF: (TLT))
Bouncing again off of the 143-18 buy signal attacked last week’s highs up to 144-18. Downtrending resistance coinciding at 144-28 is even likelier to be tested before reversing down, so long as 143-04 now holds as support.
Crude Oil Aug Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Friday’s gap up from the 65.65 buy signal to probe the 67.40 buy signal up to 66.85 wasn’t extended higher overnight. But Monday’s open did gap up and probe fresh highs at 69.45 before reversing back into negative territory at 68.00. A second consecutive higher close would have confirmed Friday’s breakout close. Momentum hasn’t reversed down, but any higher high must print immediately.
Natural Gas Jul Contract (NG, ETF: (UNG, UNL))
Probing Sunday lower night gapped down Monday to test 2.90, then bounced to test what is now resistance at 2.95. There’s no bearish reason to further delay resolving down, especially since there’s no “unfinished business above.
Mid-day Update… End of the beginning?
Lower and lower lows open door to bigger bounce.
It’s not the size that matters. Big drops can bounce a little; little drops can bounce big. The difference is from where, and when. 
The open’s 25-point plunge to 2720.00 was retraced 38.2%, during a timing window. But the noon hour’s 2703.75 low exited the noon hour back above the 2710.25 bias-down signal. Its reaction could be pretty powerful if not rejected.
So far, its reaction hasn’t been rejected. Bias-down didn’t trigger, after invoking the grace period. And 2722.00 is already being attacked. There’s room for noise during the late no-bias environment back up to its 2725.25 bias-up signal.
Timing windows aside, the noon hour low has held the test of a multi-week trading range’s lower-end. Not reinstating the decline this afternoon could extend the bounce well into or even through the 2730’s. The drop would become a victim of its own success, having expended a lot of selling pressure and tested a lot of supports.
Oversold RSIs at the low printed during the noon hour and so don’t require a rest. Retesting the noon hour lows would have a different objective, and extend the trend instead of recover it.