Posts by Rod David
Mid-day Update… Stretched.
Weak-handed rally corrected, not yet reversed.
This morning’s 2725.75 bias-up signal held a clean test to trigger no-bias. It broke later up to 2732.00, requiring its retracement. Which the noon hour did, down to 2720.50. This afternoon’s 2721.50 bias-down signal avoided triggering. So, this is a no-bias environment, with no objective in-play.
But the 2721.50 bias-down signal is still an influence. It should define this window’s lower-end.
This morning’s bias-up signal was supposed to do that, and did, ultimately. Just hovering above or around the bias-down signal until the bias environment lapses would be likely to break lower then. But bounces must recover 2726.00 to even begin suggesting a bigger bounce may be underway.
Meanwhile, the bigger picture continues playing out. Rallying prematurely this morning has failed, retraced totally to unchanged. A late afternoon rally would be credible, but not until it starts developing. There’s no requirement to trend again today, so beware of false starts.
Look ahead: Economic Calendar – for Fri May 18, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: An unusual expiration with no econ reports. Not even one, high-profile or influential. The Fed speakers are done before the open, so the session should be pliant to the WedEX signal.
Loretta Mester Speaks
3:00 AM ET
Robert Kaplan Speaks
9:15 AM ET
Lael Brainard Speaks
9:15 AM ET
Baker-Hughes Rig Count
1:00 PM ET
Afternoon Bias
| THU afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2731.50 | 2731.50 |
| …would target | 2737.50 | 2737.50 |
| Bias-down: under | 2721.25 | 2721.50 |
| …would target | 2714.75 | 2715.00 |
| Signal status: NO-BIAS, BIAS-DOWN SIGNAL TESTED | 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.
Post-open Review… The big refueling.
Pre-open and post-open sellers get trapped.
My pre-open chaRTroom comments pointed to the ongoing pre-open retest of yesterday’s late 2715.25 low as forcing a make or break situation for sellers. Patient sellers could have made it, by maintaining a shallow post-open break. 
Strong-handed sellers could have made it, by maintaining a deep break. But the deep break down to 2713.50 came so quickly that it inhibited selling at already deeply discounted prices. So, without attracting reinforcements, the earlier impatient sellers proved themselves to be weak-handed.
Holding the 2715.75 bias-down signal’s test through 10:15 would put into play an offsetting test of the 2725.75 bias-up signal. But the reaction had already tested and held the bias-up signal at 10:15. This is a no-bias environment. A later surge to fresh highs had failed by 10:30 to avoid invalidating it.
Which means this later probe even higher up to 2731.00 is “no-bias trending” that requires being retraced back down to the the 2725.75 bias-up signal… at least. RSIs are overbought at the current high, so reversing down isn’t yet likelier. That can change momentarily.
That can also extend higher. This is unlikely before late afternoon, even if a bigger recovery is coming then. So, trying to reverse down prematurely could correct the rally before it extends up after exiting this afternoon’s bias environment.. Neutralizing the overbought RSI could reverse the trend back down.
The First Trade & Pre-open Tour Recording… Shallow potential for a shallow bounce.
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…
Tuesday night’s initial dip down to 2704.25 had gradually recovered 7-8 points to unchanged. Briefly probing higher to attack 2715.00 was reversed back down to 2704.25. “If at first,” right? Well… The half-hour preceding Wednesday’s open recovered back up to unchanged and the open quickly extended through it to probe the overnight highs. The noon hour’s higher highs touched the afternoon’s 2727.25 bias-up target, before bias-up was even triggered, so the bias environment only ranged sideways. The final hour’s failed attempt to break higher was instead snapped back down to 2717.50, where a snap back up barely recovered back above the morning’s highs to 2723.00. WedEX triggered a bearish signal.
Overnight action’s new info…
Wednesday’s late recovery firmed only a little higher into Globex’s open, and then began reversing down. Gradually at first, retracing 61.8% of the bounce back down to 2720.00. The rest was retraced into Europe’s opens to within 1 tick of this morning’s 2715.75 bias-down signal (defensive posturing?). Since then, the market is ranging around yesterday’s late 2717.50 low.
If, then…
Several factors have warned us that yesterday’s rally was sponsored by weak hands. The pre-open defensive posturing, rallying sharply to peak during the unpredictive noon hour, peaking during that window at a target, and holding a test of “higher prior lows.” All of which could be overcome by gapping up today above the 2732.00 upper-end of those higher prior lows, the opposite of which is indicated by the overnight action. Any shallower post-open strength would be vulnerable to failure. Now the question is whether that bearishness takes control post-open to retrace the rally back down to Tuesday’s lows. Posturing defensively ahead of Europe’s opens hasn’t reacted with a relief rally, so repeating the same sentiment could actually restart yesterday’s late reversal down.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2714.00 would be likely to trigger the 2715.75 bias-down signal at 10:15. Exiting the open above 2723.00 would be unlikely to trigger bias-down.