Posts by Rod David
Market Wrap (recording & summary)
Is that a new downtrend you’ve got there, or are you just happy to get sellers out of the way?
The 3-day holiday weekend ended more abruptly than the calendar had suggested. May 14-22’s Double Top already had retraced its 2700.00 interim low too deeply to rely on the rally resuming. Corrective bounces testing and retesting the 2730.00 area never regained momentum. And Friday’s inside day didn’t change matters. So, Tuesday’s gap down to 2700.00 had only two choices: Extend down, or else bounce before extending down.
It was a little of each, as the open’s 2697.00 low was recovered to test “higher prior lows” up to 2709.50 before retracing entirely. The 2690.00 overnight low was soon retested by a plunge into the noon hour that got to 2676.50. Bouncing to 2691.50 was retraced back to the low, and then recovered back up to 2691.50 into the close.
A lot of selling pressure was satisfied below. Renewing the morning’s bias-down signal under 2708.00 had put into play 2679.00-2683.50. It didn’t require an intraday retest. So, is its quick test the sign of a correction wanting to resolve up soon? A higher close Tuesday might have suggested as much, but the decline’s momentum remains intact.
Gapping up — or down — by enough margin Wednesday could reverse or extend the decline, respectively. Any strength shallower than 2715.00 is likely to resolve down. Meanwhile, since Tuesday’s sellers gained no traction for their efforts, the 2675.00-2676.00 lows need to break Wednesday before suggesting buyers are marginalized.
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))
Friday’s session wasn’t conducive to immediately forming a market bottom, let alone to reversing up. Extending down Monday gapped open to fresh lows Tuesday that also entrench the decline and delay the next bottoming opportunity.
Gold Jun Contract (GC, ETF: (GLD))
Monday’s rally to 1306.00 was reversed down Tuesday to 1291.50, nearly filling the gap back to last Wednesday’s close. It was recovered already intraday to fill the gap back up to Friday’s 1303.50 close. Sellers were prevented from gaining traction, while near-by attractions above and below were neutralized. There’s no requirement to break either way, but closing under 1298.50 would resume the decline.
Silver Jul Contract (SI, ETF: (SLV))
Gapping down sharply Tuesday retested last Wednesday’s 16.35 low, which was still being tested at the close. A fresh low close would likely resume the decline.
30-year Treasury Jun Contract (US, ETF: (TLT))
The rally extended sharply higher to test 146-00 in an overnight flight-to-safety. Its pullback potential to 144-20 was already being tested at Tuesday’s open. A retest of overnight highs is possible or even likely so long as the pullback limit continues to hold. In fact, it’s just several ticks away as of Tuesday afternoon.
Crude Oil Jul Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Having broken the 71.30 optimal pullback limit last week and then extended lower, extending even lower after the weekend to 65.80 was neither required nor surprising. Any outstanding target above isn’t going to be recovered immediately, but the more timely question is whether the pullback can now end. The nearest buy signal is 67.90, and should be lowered Wednesday.
Natural Gas Jul Contract (NG, ETF: (UNG, UNL))
[Rolling coverage forward to Jul, which trades at a 3-cent premium to Jun]… Friday’s fresh high intraday had failed to make a new closing high, which last week’s confirmed breakout still requires. That didn’t prevent Tuesday’s gap down back to “lower prior highs” at 2.88, which should hold as support to launch a test of 3.00.
Mid-day Update… Getting serious.
Two 30-point plunges in 10 hours seems to have a message behind it.
Actually, the second plunge was 33 points. The 30-point plunge had produced the 2690.25 overnight low. 
Bouncing 19 points into and out of the open was not unimpressive, but it’s all relative, and peaked upon retracing 61.8% of the first plunge. The second plunge slid into the noon hour’s 2676.50 low.
That’s about 55 points under Friday’s close. And it expends a lot of selling pressure. It fulfills a lot of selling pressure, too. The morning’s bias renewed the bias-down target next targeting 2679.00-2683.50. And it comes within 1 tick of this afternoon’s 2676.25 bias-down target.
The market seems to have noticed all of the selling pressure, and the relevant levels being tested. The noon hour reacted up to 2691.50. And its 11-point reaction down extended too late to trigger a late bias-down, holding the afternoon’s 2683.50 bias-down signal.
Bias-down narrowly avoided triggering. And the 11-point reaction down is now probing under the 2683.50 bias-down signal. I’m giving sellers a benefit of the doubt for at least a fresh low, if not also to extend the drop this afternoon or tomorrow. But since they’re already trying, they had better succeed. Otherwise, exiting the bias environment back above 2695.50 could extend sharply higher.
Look ahead: Economic Calendar – for Wed May 30, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Wednesday’s ADP is both high-profile and influential to price action. It also offers a glimpse of sentiment ahead of Friday’s payrolls report. Wednesday afternoon’s Beige Book is high-profile, and occasionally also influential.
MBA Mortgage Applications
7:00 AM ET
*ADP Employment Report
8:15 AM ET
GDP
8:30 AM ET
International Trade in Goods
8:30 AM ET
Corporate Profits
8:30 AM ET
Retail Inventories [Advance]
8:30 AM ET
Wholesale Inventories [Advance]
8:30 AM ET
Redbook
8:55 AM ET
Bank of Canada policy statement
11:00 AM ET
*Beige Book
2:00 PM ET
Farm Prices
3:00 PM ET
Afternoon Bias
| TUE afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2696.25 | 2695.00 |
| …would target | 2702.75 | 2701.50 |
| Bias-down: under | 2684.50 | 2683.50 |
| …would target | 2677.25 | 2676.25 |
| Signal status: LATE NO-BIAS, TESTED BOTH BIAS-DOWN PARAMETERS | FAQ | |
| Flowcharts: Bias-UP // Bias-DN INTRO VIDEOS #1 and #2 |
||
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.