Posts by Rod David
The First Trade & Pre-open Tour Recording… Cuts both ways.
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…
Probing above Wednesday’s 2733.00 high Thursday morning was all but obligatory. Which almost happened, if not for the knee-jerk reaction to the North Korea news. The morning plunged from 2730.50 down to 2705.75. But it was a non-market headline, making its retracement likely. Which happened, to within 3 ticks. “Unfinished business above” was left outstanding at Thursday afternoon’s 2732.00 bias-up target.
Overnight action’s new info…
Flat-to-higher narrow ranging eked back up to Thursday’s 2730.50 opening high. And then higher, briefly consolidating at the 2732.00 unfinished business, and then spiking up to what is Friday morning’s 2737.50 bias-up target. Sliding down to 2728.50 into and out of Europe’s opens (defensive posturing) wasn’t recovered immediately. And it then it wasn’t recovered entirely, bouncing only to 2735.00 before reversing down under 2725.00.
If, then…
The attraction of yesterday’s “unfinished business above” at 2732.00 would have helped to resume the rally Friday morning. But its test is already fulfilled overnight, as is the likely probe of fresh highs. They’re not UNlikely to be tested intraday, but that’s not required. And their retests won’t be likely at all if the open is already breaking back under the earlier 2727.00 overnight low, which is now being probed. Remember that the bullish influence of a 3-day holiday weekend has been undermined twice, and a third time shouldn’t be surprising. Recovering from negative territory through or before the open to probe fresh highs would still be vulnerable to reversing down, but much less so.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2727.25 would be unlikely to trigger the 2730.75 bias-up signal at 10:15. Exiting the open above 2733.00 would be likely to trigger bias-up.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2732.00 | 2730.75 |
| …would target | 2738.75 | 2737.50 |
| Bias-down: under | 2722.75 | 2721.50 |
| …would target | 2716.75 | 2715.50 |
| Signal status: NO-BIAS, TESTED BIAS-DOWN SIGNAL | 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)
Did Europe’s bearish attitude play any part in Thursday morning’s sizable reaction to the North Korea news? The knee-jerk reaction happened early enough that Europe’s influence could be considered. And the second push down under 2714.00 to 2706.00 might have included previously patient sellers no longer awaiting the obligatory probe above Wednesday’s 2733.00 high.
The point is that weak-handed sponsorship was bearish. Knee-jerk reactions to new headlines is already considered to be weak-handed sponsorship. Recovering the entire drop back up to its 2729.00 origin — which the balance of Thursday’s session did — may not be enough consequence, or enough reward to buyers that absorbed them.
Unfinished business above remains outstanding at Thursday afternoon’s 2732.00 bias-up target. Its attraction could help to resume the rally Friday morning, so long as the open isn’t greeted or followed by too deep of a pullback. Fresh highs are still vulnerable to reversing down, as has been the case all week. But this being a Friday, not rejecting opening strength could extend much higher into the weekend.
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))
Testing “higher priopr lows” at 1.1755 overnight limited Thursday’s gap up. Now filling the gap back down to Wednesday’s 1.1730 open can complete a bottom.
Gold Jun Contract (GC, ETF: (GLD))
Gapping back up Thursday to retest Wednesday’s 1298.00 pre-open high only extended higher to 1306.50. The pattern leaves “unfinished business below,” but a second consecutive higher close Friday would confirm a test of 1316.00-1317.00 is in-play.
Silver Jul Contract (SI, ETF: (SLV))
Thursday’s gap up to Tuesday’s 16.57 close ignored Wednesday’s gap down and probe lower. It even extended to test Tuesday’s 16.70 high. Closing any higher would start to signal another detour from probing new lows, let alone filling the 3-week old gap outstanding below.
30-year Treasury Jun Contract (US, ETF: (TLT))
Closing AT the 142-02 buy signal Wednesday was extended overnight to gap up Thursday, and that was extended intraday back up to the original 143-07 sell signal. A more bullish recovery would have first dipped to test “lower prior highs” at 141-04/141-10 before trying to extend higher, which is instead vulnerable to reacting down.
Crude Oil Jul Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Wednesday’s low was optimal for ending the corrective dip and resuming the rally targeting 74.20. But Thursday night’s slide gapped down to test 70.65 support, which is a 61.8% retracement of the prior extended consolidation that had launched the latest upleg. And that was launched after an initial breakout had been corrected already. So, Thursday’s extended dip isn’t bullish, and must be rejected almost immediately, and aggressively, to avoid a deeper dip.
Natural Gas Jun Contract (NG, ETF: (UNG, UNL))
The knee-jerk reaction to Thursday’s EIA report was modest, barely improving before holding the resistance of Wednesday’s 2.94 high. “Ineffectual pessimism” should resolve up aggressively Friday, or else another corrective dip would become more likely.
Mid-day Update… The short road back.
Non-market headline’s knee-jerk reaction retraced almost entirely.
This morning’s N. Korea meeting news was relevant, but it wasn’t market related. It was very productive, too,
reversing from 2730.50 down to 2705.75. That took 90 minutes, while the more immediate consequence tested 2714.00. I suspect that the extension was sponsored by the same patient sellers that were waiting for that obligatory probe above yesterday’s highs.
In other words, that’s a lot of selling pressure.
The question I posed earlier was whether attracting those patient sellers would produce a break under relevant support. Which they didn’t. The bias environment began lapsing several points above its 2713.00 bias-down target, and at its 2720.75 bias-down signal.
In other words, that’s a lot of weak-handed selling pressure.
Already, rallying through the noon hour has retraced almost all of the non-market related headline’s reaction. Hovering at or under 2728.25 has triggered this afternoon’s 2725.25 bias-up signal. Extending higher isn’t much likelier than backing-and-filling. But now another sell-off has been retraced, which could inhibit sellers into the weekend if Europe’s bearish attitude is kept in check.