Posts by Rod David
Post-open Review… Fattening it up for tomorrow’s kill.
Rallying back to the highs, while it can.
Maintaining the open above yesterday’s 2779.00-2780.00 low was the minimum requirement to isolate the overnight probe below it. Back above the week’s earlier 2783.00-2784.00 lows was preferable. Most convincing would have been to recover 2788.00-2788.75, too, which would also invert the bearish WedEX.
Sooo close.
The first 15 minutes of volatility fluctuated choppily around 2788.00-2788.75. That was on the way down from the pre-open touch of 2790.75, and the first half-hour’s ultimate dip to 2786.25. That was easily high enough to fulfill the Isolation setup. The likely minimum reward is to retrace the prior high, which is yesterday’s 2796.00 peaks. I would expect 2798.00 to be met, too, neutralizing its “unfinished business above.”
The Isolation setup usually backs-and-fills during the morning, before resuming its recovery. Surging up to fresh highs at 2794.00 is already being retraced back down to 2787.00. There’s room down to the 2786.00 bias-up signal, which could be probed temporarily down to 2783.00-2784.00.
The 2786.00 bias-up signal should hold as support if tested, because this is a bias-up environment. Still overlapping its 2793.00 bias-up target at 10:15 failed to renew the signal, and often holds through the morning.
As for recovering 2788.00-2788.75 to invert yesterday’s bearish WedEX, not quite. That’s not a decisive rejection. As it happens, the setup wasn’t triggered decisively, either. So, we’ll keep the door open for a bearish afternoon tomorrow, especially so long as today’s close is back under 2788.00-2788.75.
The First Trade & Pre-open Tour Recording… Rejection, no. Isolation, maybe.
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…
Optimism was alive and, well, waning ahead of Wednesday’s FOMC events. The morning’s sponsorship triggered bias-up but left its 2798.00 target outstanding. It was attacked it to within 2 points at the morning’s retest of the 2796.00 overnight high, and becomes “unfinished business above.” Drifting lower through the noon hour greeted the FOMC statement at 2792.00. Its reaction down extended to 2781.50, which was retested after bouncing to 2793.50. The cash session close was testing 2779.00-2780.00, and futures settled another 2 ticks lower.
Overnight action’s new info…
Choppy ranging around Wednesday’s close eventually trended down, breaking to fresh lows after midnight. Bottoming soon after Europe’s opens, bouncing since then has retraced back up to yesterday’s 2779.00-2780.00 close, testing natural resistance at unchanged.
If, then…
Isolating the probe under yesterday’s low to the overnight could form an Isolation setup targeting a retest of yesterday’s high. Just holding above yesterday’s 2779.00-2780.00 late lows would be less convincing than to recover Monday-Tuesday’s 2783.00-2784.00 support. Recovering 2788.00-2788.75 through the open would be most convincing, and could also serve by proxy to invert yesterday’s late bearish WedEX. Perhaps that was only a temporary product of defensive posturing ahead of this morning’s ECB policy statement and Draghi Q&A. Otherwise, rallying this morning from a shallower open is still possible, even without exploiting the Isolation opportunity, or inverting the bearish WedEX. Delaying a rally this morning isn’t likely to rally at all, because then the paradigm is probably already shifting to the downside.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2780.50 would be unlikely to trigger the 2773.50 bias-down signal at 10:15. Exiting the open under 2784.00 would be unlikely to trigger the 2786.00 bias-up signal. Exiting the open above 2788.75 would be likely to trigger bias-up.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2781.75 | 2786.00 |
| …would target | 2788.75 | 2793.00 |
| Bias-down: under | 2769.25 | 2773.50 |
| …would target | 2762.50 | 2766.75 |
| 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)
FOMC days are fun, more so when accompanied by the Fed Chair’s quarterly Q&A. The morning’s sponsorship triggered bias-up but left its 2798.00 target outstanding. It remains outstanding after attacking it to within 2 points at the morning’s retest of the 2796.00 overnight high.
Drifting into the FOMC statement triggered a drop to 2784.50 that extended to 2781.50. The Q&A triggered a rally to 2793.50. Then the nothingness triggered a reversal down to fresh lows. The cash session close was testing 2779.00-2780.00, and futures settled another 2 ticks lower.
The 2783.00-2784.00 area has been relevant support on Monday and Tuesday, as well as being last Thursday’s high. Probing under it when coming within 3 minutes of the cash session close triggered a very last-minute bearish WedEX. Probing it any later or not probing it at all would have triggered no signal.
Narrowly triggering the signal still qualifies, but it’s not optimal. Gapping up Thursday and exiting the open above 788.00-2788.75 would serve by proxy to reverse the signal to passively bullish. Meanwhile, the setup usually doesn’t influence price action until Friday afternoon and Monday morning, but not rejecting it could produce the bigger dip I had described in Wednesday’s First Trade.
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 Jun Contract (EC, ETF: (FXE, UUP))
Tuesday’s dip to the 1.1745 sell signal reacted up again Wednesday, shallowly at the open with only a little follow-through before the afternoon’s FOMC policy statement. The reaction dropped back down to 1.1745, almost greeting Thursday’s ECB monetary statement from a position of weakness.
Gold Aug Contract (GC, ETF: (GLD))
Ongoing fluctuation between 1296.50-1307.00 had retested the range’s lower-end by $2 overnight. It held intraday, and was attacked again after the close in reaction to the FOMC policy statement.
Silver Jul Contract (SI, ETF: (SLV))
Another shallow reaction down overnight from the 16.95 target stopped short of the 16.80 sell signal before recovering to gap up slightly Wednesday and test fresh highs at 17.00. The post-close FOMC reaction dropped back down to attack Tuesday’s 16.85 close.
30-year Treasury Sep Contract (US, ETF: (TLT))
Tuesday’s narrow ranging persisted through Wednesday morning ahead of the afternoon’s FOMC policy statement wasn’t much different from the post-FOMC price action. Perhaps a little weaker, and still having potential to test 142-00 as support.
Crude Oil Jul Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Post-close weakness from the API report was temporary. Wednesday’s gap down was shallow, and reacted up to a fresh recovery high attacking 66.90 after the morning’s EIA report and the afternoon’s FOMC statement. There is no bullish excuse to further delay the rally becoming obvious.
Natural Gas Jul Contract (NG, ETF: (UNG, UNL))
Tuesday night’s test of 2.98 was attacked intraday Wednesday. The minimum target of 3.00 and the minimum objective of at least one more new trend high close remain outstanding. Thursday’s EIA report is being greeted from a position of strength.