Posts by Rod David
The First Trade & Pre-open Tour Recording… Playing possum.
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…
Wednesday’s 11-point gap up consolidated through the open, holding above the bias-up target to renew the bias-up signal. The second hour resumed the overnight rally to first test 2715.00, which was the bounce limit for defining the rally as only a correction off of Tuesday’s 2675.00. Extending into the afternoon bias environment peaked upon testing the 2727.25 bias-up target, which was probed momentarily by 2 points. A sell signal triggered too late to be sponsored by strong hands, limiting its reaction down to only a minimum 2721.50 target. No “unfinished business above” was left outstanding.
Overnight action’s new info…
Yesterday’s late dip reacted back up through the close 5 points from its 2721.50 target to 2726.50. Globex gapped down to pierce what is this morning’s 2718.75 bias-down signal, which supported a brief consolidation that soon resolved back up. But resolving up only peaked upon retesting yesterday afternoon’s 2727.25 resistance, which has reacted back down to 2721.50.
If, then…
While Wednesday’s late dip to its 2721.50 target was sponsored by weak hands, the dip did serve to chip away at support there. Its intraday retest isn’t any likelier, but its intraday retest is now less likely to hold as support. Still, its break has room down to 2711.00 before signaling the trend reversing back down. Otherwise, having recovered to close above 2715.00, fresh highs are likely to probe above 2733.00. Meanwhile, keep in mind there is potential this week for a third session characterized by gapping open and running in the gap’s direction until fulfilling its objective. If today’s session is not that session — and it is currently indicated not to gap open — then that potential would compound and transfer to Friday.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2727.25 would be unlikely to trigger the 2730.00 bias-up signal at 10:15. Exiting the open above 2725.25 would be unlikely to trigger the 2718.75 bias-down signal.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2737.75 | 2730.00 |
| …would target | 2737.25 | 2736.50 |
| Bias-down: under | 2719.25 | 2718.75 |
| …would target | 2711.00 | 2710.50 |
| Signal status: BIAS-DOWN | 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)
So, is Wednesday’s bounce not a temporary correction? It avoided closing back under 2715.00, which was the minimum requirement to signal that upside momentum had lapsed. No “unfinished business above” was left outstanding, as the afternoon’s 2727.25 bias-up target contained session highs. But reactions didn’t extend back under 2725.25 into the final hour or during the proxy window, so breaking later to its 2721.50 target was only noise.
But the late break did serve to chip away at support around 2721.50. It’s not any likelier to be retested Thursday, but its intraday retest is now less likely to hold. Still, its break has room down to 2711.00 before signaling the trend reversing back down.
Probing Wednesday’s 2729.25 high overnight but greeting Thursday’s open back under the initial overnight lows would also signal the trend reversing back down. Preferably, fresh highs would first probe above 2733.00.
Regardless, keep in mind that this week’s action now contains multiple occurrences of gapping and running in the gap’s direction. Gapping significantly and running substantially. Being self-contained by fulfilling any objectives and leaving no “unfinished business” outstanding. So, gapping open in either direction Thursday would be likely to extend in that direction — even up. Thursday isn’t any likelier to gap and run, but not doing so would make Friday likely to repeat the pattern.
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))
Gapping up Wednesday has left outstanding Tuesday’s gap open under all prior lows, and the gap back to Wednesday’s close, both of which should be filled before a durable rally can form. Meanwhile, being deeply oversold is vulnerable to snapping back up, substantially albeit temporary, especially if the downside catalysts are rectified while the upside momentum of this natural bounce can be leveraged by the news. Already, the gap back to Friday’s 1.1675 close has been filled at Wednesday’s high, with room up to 1.1755.
Gold Aug Contract (GC, ETF: (GLD))
[Rolling coverage forward to Aug, which trades at a $5.20 premium to Jun…] Wednesday’s inside day held the same 1308.50 resistance that Wednesday’s highs had tested, which filled the gap back up to Friday’s close. That had neutralized upside momentum from recovering Tuesday morning’s dip, which had bounced prematurely short of filling the gap back down to last Wednesday’s close. Initial strength Thursday would be credible for having absorbed sellers Wednesday, but not necessarily reliable for extending higher without maintaining fresh highs through the close.
Silver Jul Contract (SI, ETF: (SLV))
Wednesday’s gap up to 16.45 immediately recovered Tuesday’s high. Extending higher filled the gap back to Friday’s 16.55 close. The original 16.60 sell signal remained intact, but the decline should resume without much further delay to maintain that the upside action is counter-trend.
30-year Treasury Jun Contract (US, ETF: (TLT))
Having fulfilled the retest of 146-00 up to 146-23, already reversing back down to the 144-20 pullback limit overnight suggested that a deeper pullback down to “lower prior highs” at 143-08 was underway. But intraday action was only a narrowly ranging inside day. The interim low’s break is still a valid sell signal, but now its pullback would more likely target 143-20. Meanwhile, until triggering the reversal another test of the 146-00 area remains possible.
Crude Oil Jul Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Wednesday’s rally eventually probed the 67.90 buy signal. Extending higher Thursday to close above 69.00 would confirm the pullback had ended, or at least this stage, opening the door to retesting the highs and higher. That’s assuming Thursday’s holiday-delayed EIA report doesn’t react down to fresh lows, and recovers any initially negative knee-jerk reaction.
Natural Gas Jul Contract (NG, ETF: (UNG, UNL))
Tuesday’s gap down to “lower prior highs” wasn’t rejected Wednesday, as the session’s inside day only ranged narrowly. Thursday’s EIA report is not being greeted from a position of strength, but an initially negative knee-jerk reaction that recovers into positive territory should also reverse up and begin the recovery.
Mid-day Update… And now back up to square one.
Relentless intraday rally testing a lot of resistance.
Today’s session is decidedly different from yesterday. On its face. There are interesting commonalities beneath the surface.
Gapping down Tuesday and trending down sharply is different only directionally from today’s gap up that has trended higher. 
Each session was drawn by attractions that were neutralized but broken. And neither has confirmed its trending is durable.
Being similar, today’s pattern should resolve differently. Yesterday reversed from a fresh session low back up to a prior high, stopping short of signaling momentum had reversed up. Today’s pattern doesn’t have a similar prior low to retrace, but its upside momentum can be contained by closing back under 2715.00. And closing under 2711.00 can signal momentum reversing down.
Of course, the other different resolution is not to reverse down, at all. This afternoon’s 2727.25 bias-up target was met at 1:20 and it’s still being tested a half-hour later while RSIs finally diverge negatively. Exiting the bias environment high by ignoring the target’s resistance and the technicals’ drag would be likely to probe above 2733.00.
Regardless of today’s resolution, and while awaiting it, keep in mind that this week has already indicated a pattern of quick turns and strong trending. Be careful not to get caught for too long on the wrong side of a move.