Posts by Rod David
Market Wrap (recording & summary)
Haven’t seen a “Wreversal Wednesday” in awhile. Maybe we didn’t see one this week, either. Usually the initially compelling leg is developed during the morning, before reversing more substantially into the afternoon. Wednesday’s decline developed overnight, and the entire session was spent retracing it. We’ll still give it a benefit of the doubt and expect some upside follow-through.
That is, unless Thursday’s open is weak and weakens. A weak open in itself would still be entirely capable of retracing and reversing up to extend Wednesday’s recovery. But opening lower and extending down could instead start rejecting Wednesday’s recovery.
Reversing down has room down to 2713.00-2717.00 while still being recoverable. The 3-day holiday weekend’s flat-to-higher influence makes trending any deeper difficult. But not impossible. Especially since Tuesday night’s drop suggests overnight sponsorship is both productive and bearish, and the 3-day U.S. holiday increases the Asian and European influences.
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))
When only the slightest improvement is needed to reverse the trend up, its likely alternative is to extend the trend aggressively. Which Wednesday’s gap down well under all prior lows did. Bounces should be limited to 1.1765 unless a bottom begins forming.
Gold Jun Contract (GC, ETF: (GLD))
Tuesday night’s bounce to 1298.00 resistance originated from an unstable base that had failed to decisively recover above 1290.00. Wednesday’s open gapped up only slightly, back down within Tuesday’s range, and fresh session lows tested 1287.00.
Silver Jul Contract (SI, ETF: (SLV))
Wednesday’s gap down to 16.55 collapsed through the open own to 16.33, still not as low as Monday’s overnight dip, but maintained to maintain the decline’s trend.
30-year Treasury Jun Contract (US, ETF: (TLT))
Three days of testing the 141-04 bounce limit didn’t bother any corrective dip or retest of last week’s low, neither of which was needed prior to recovering. Wednesday’s open gapped up to the 142-02 buy signal and fluctuated around it. The gap back down to 141-08 will be likely to fill if Thursday doesn’t extend the rally early.
Crude Oil Jul Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Already retracing Monday’s 72.90 fresh high down to 72.00 on Tuesday, Wednesday’s spike down to test 71.70 in reaction to EIA was not helpful. It wasn’t as bearish as could have been, and the 74.20 target remains in-play.
Natural Gas Jun Contract (NG, ETF: (UNG, UNL))
Tuesday’s gap up and extension to fresh highs was all but repeated Wednesday, which extended aggressively higher. This confirms Tuesday’s breakout, and greets Thursday’s EIA report from a position of strength.
Mid-day Update… Another shoe?
Early swings narrow into and out of the lunch hour.
The open’s 10-11 point surge up to natural resistance near yesterday’s 2721.50 low was reversed down to 2708.50. A lot of that was recovered up to 2720.00 through the bias environment lapsing. Another 2-3 swings have narrowed around 2715.00, triggering the afternoon’s no-bias.
FOMC Minutes is due at the top of the hour.
Not yet extending the rally when the bias environment lapses might still attempt it, but not very credibly. Simply resuming the rally would be more credible for resuming the decline — and the most credible alternative to not improving the recovery.
Look ahead: Economic Calendar – for Thu May 24, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Thursday’s two Housing sector reports aren’t reliable for influencing price action, although combined with Wednesday’s report there is greater potential for an outlier. Otherwise, an afternoon Fed speaker offers a catalyst to keep price action moving.
Jobless Claims
8:30 AM ET
FHFA House Price Index
9:00 AM ET
Bloomberg Consumer Comfort Index
9:45 AM ET
Existing Home Sales
10:00 AM ET
EIA Natural Gas Report
10:30 AM ET
Kansas City Fed Manufacturing Index
11:00 AM ET
7-Yr Note Auction
1:00 PM ET
*Patrick Harker Speaks
2:00 PM ET
Fed Balance Sheet
4:30 PM ET
Money Supply
4:30 PM ET
Afternoon Bias
| WED afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2721.25 | 2720.75 |
| …would target | 2727.75 | 2727.25 |
| Bias-down: under | 2712.00 | 2711.75 |
| …would target | 2704.75 | 2704.50 |
| Signal status: NO-BIAS | 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.