Posts by Rod David
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2726.50 | 2725.75 |
| …would target | 2731.75 | 2731.00 |
| Bias-down: under | 2716.25 | 2715.75 |
| …would target | 2708.75 | 2708.25 |
| Signal status: NO-BIAS, BOTH BIAS SIGNALS TESTED | FAQ | |
| Flowcharts: Bias-UP // Bias-DN INTRO VIDEOS #1 and #2 |
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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)
When is a rally not a rally? Trick question — by any other name, a rally is a rally is a rally. But its sponsorship can vary, leading to entirely different resolutions.
Wednesday’s rally up to 2727.25 didn’t prove that its sponsorship was strong-handed. The consequence would be to retrace the rally entirely back to and likely through its origin at Tuesday’s ~2701.00. Wednesday’s opening surge was the reaction to pre-open defensive posturing, the morning couldn’t trigger bias-up, the afternoon’s bias-up target was met during the noon hour, and then not extended when the bias-up environment ended. All behaviors of weak hands.
And it wasn’t just that weak hands expended energy when they couldn’t gain traction for it, or that they fulfilled their buying pressure. The weak-handed rally also held a test of resistance at 2725.00, essentially filling the gap back to Monday’s close by testing the lower-end of the structure containing it.
The upper-end of that structure is essentially 2732.00, and its recovery through Thursday’s open would accomplish by proxy what Wednesday’s close did not. Similarly, it would serve by proxy to signal a bullish WedEX, which is otherwise bearish for having held the test of resistance.
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))
Immediately extending Tuesday’s drop (by closing lower, not by gapping down) has confirmed the breakout from a multi-session range. An eventual third lower close is required before a bottoming effort can be credible.
Gold Jun Contract (GC, ETF: (GLD))
Wednesday’s lower lows were retraced to unchanged, but the bounce limit was lowered to 1295.00. Firming slightly higher after the close at this stage should either give the bounce limit a test on Thursday, or else snap back down to resume the decline.
Silver Jul Contract (SI, ETF: (SLV))
Firming Wednesday morning extended through the close to attack the 16.45 bounce limit. Stopping optimistically short of even filling the 2-week old gap, and now bouncing higher instead of neutralizing the downside attraction, is requiring a substantial rally Thursday, or else a substantial resumption of the decline.
30-year Treasury Jun Contract (US, ETF: (TLT))
Wednesday’s gap up was shallow, and retraced back into negative territory, attacking Tuesday’s lows down to 140-28. The breakout was already confirmed, so the pattern still requires an eventual third lower close before bottoming can be credible.
Crude Oil Jul Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Another day of extremely narrow ranging — not yet extending the entrenched rally — continues to be vulnerable to a deeper corrective detour down before resuming the rally.
Natural Gas Jun Contract (NG, ETF: (UNG, UNL))
Pulling back further Wednesday from Tuesday’s failed gap up didn’t get to 2.80, whose test could have held to form a position of strength ahead of Thursday’s EIA report. But closing back under 2.76 was needed to form a position of weakness, which means that a favorable reaction Thursday can’t be dismissed.
Mid-day Update… Neither here nor there.
Session’s higher highs fill Monday’s gap.
“Nobody eats at that restaurant anymore, it takes too long to get it.” – Yogi Berra
2704.00 was attacked just a half-hour before the open. The noon hour’s high just tested 2727.25. That’s not necessarily strong-handed sponsorship. And if it’s weak-handed, then a reversal back to yesterday’s ~2701.00 lows is likely.
Why is today’s rally not necessarily strong-handed? Earlier, I noted the pre-open defensive posturing. Now the afternoon’s bias-up target has been met during the noon hour, before even being put into play at 1:20. Moves contained to the noon hour can still gain traction by recovering a relevant level, but less so by holding a relevant level’s test. So, the trending probably was sponsored by weak hands.
It’s still a bias-up environment. Exiting it above the bias-up target would suggest that strong-handed buyers have been attracted as reinforcements, anyway. Backing-and-filling during this bias-up environment isn’t very appropriate, and dipping too deeply could trend down through the close.
Look ahead: Economic Calendar – for Thu May 17, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Thursday’s econ calendar is busy with both high-profile and reliably influential reports. Any noticeable reaction to the pre-open reports is likely to be duplicated in reaction to post-open reports.
WedEX signal
Wed 4:00 PM ET
James Bullard Speaks
Wed 6:30 PM ET
Jobless Claims
8:30 AM ET
*Philadelphia Fed Business Outlook Survey
8:30 AM ET
Bloomberg Consumer Comfort Index
9:45 AM ET
E-Commerce Retail Sales
10:00 AM ET
*Leading Indicators
10:00 AM ET
EIA Natural Gas Report
10:30 AM ET
*Neel Kashkari Speaks
10:45 AM ET
10-Yr TIPS Auction
1:00 PM ET
Fed Balance Sheet
4:30 PM ET
Money Supply
4:30 PM ET