Posts by Rod David
The First Trade & Pre-open Tour Recording… Was it enough?
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…
Monday paid the price, or start paying it, for Friday not actually having corrected Wednesday and Thursday’s surges. Meanwhile, Monday was also the second consecutive session to probe fresh highs and then reverse back into negative territory. That’s less relevant for Friday, which isn’t as relevant of a session, but the combination is distributive anyway. Monday’s 2724.25 fell back into “lower prior highs” at Friday afternoon’s range. RSIs were only on the cusp of being overbought, which would otherwise be “unfinished business” above. And unfinished business below was left outstanding at 2721.50. But both recent sessions avoided closing negative, and the ongoing trend of higher highs and higher lows remains intact, so there’s not yet a trend reversal signal.
Overnight action’s new info…
Ranging narrowly between 2728.00-2731.00 started breaking lower on China’s disappointing economic data. Extending to 2720.50 fulfilled Monday’s unfinished business below. Its reaction bounced into and out of Europe’s opens on the way up to 2727.00. Its 61.8% retracement down to this morning’s 2724.00 bias-down signal was recovered to attack 2729.00. That’s unchanged from yesterday’s close, and natural resistance, which has reacted down to attack 2724.00.
If, then…
The likelihood for a failed probe lower wasn’t necessarily fulfilled by recovering the overnight dip. It did neutralize the nearest attraction below, and is trying to avoid triggering the bias-down signal. The recovery so far is only back to unchanged, which is also natural resistance. Triggering bias-down is still possible, and would be credible for probing Thursday afternoon’s low under 2713.00. Otherwise, rallying this morning could be limited to 2737.50, or a retest of yesterday’s highs — which would be bullish if it were to avoid snapping back down sharply.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2725.25 would be less likely to trigger the 2724.00 bias-down signal at 10:15. Exiting the open under 2727.00 would be unlikely to trigger the 2732.25 bias-up signal.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2733.25 | 2732.25 |
| …would target | 2739.00 | 2738.00 |
| Bias-down: under | 2724.75 | 2724.00 |
| …would target | 2718.75 | 2718.00 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET EXCEEDED | 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)
Wednesday and Thursday’s consecutive similar sessions gave us clues to help react during Friday’s session. Both sessions had gapped up, eventually trending up sharply, into an after consolidation at a next higher objective. Another sustained intraday rally became unlikely.
Now the next two consecutive sessions have behaved similarly to each other. Rallying through the open and extending to their bias-up targets, then reversing into negative territory through the afternoon. Another failed morning rally is unlikely.
But a failed probe lower is possible, like after fulfilling “unfinished business below” at Monday afternoon’s 2721.50 bias-down target. Extending lower is possible, too, like probing Thursday afternoon’s low under 2713.00. Another rally leg is also possible, but a corrective bounce could be limited to 2737.50.
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))
Monday’s open quickly extended through the lower-end of the 1.1975-1.2025 buy signal to touch its upper-end, still needing to close higher to signal the a reversal underway. Dipping from the open held the range’s lower-end.
Gold Jun Contract (GC, ETF: (GLD))
Gapping down Monday held above 1316.00 whose break would end the corrective bounce without needing to fulfill its 1329.00 potential first.
Silver Jul Contract (SI, ETF: (SLV))
Already having fulfilled the minimum 16.80 bounce potential, Monday’s dip back down to the 16.65 sell signal threatened to reverse the trend back down. Closing under it would be credible for resuming the decline.
30-year Treasury Jun Contract (US, ETF: (TLT))
Higher prior lows had been tested, gaps had been filled, and the buy signal had been threatened. There was no excuse to further delay another break under the 143-07 sell signal Monday, which extended down to attack Thursday’s 142-17 low. That stopped optimistically short before retracing 61.8% back up to Friday’s close. A second consecutive lower close Tuesday is still needed to confirm another downleg underway.
Crude Oil Jul Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Overnight weakness tested the 70.25 pullback limit to within 1 penny. Narrow intraday ranging Monday didn’t exploit having contained the dip, keeping alive potential for a deeper detour down on the way up to 74.10.
Natural Gas Jun Contract (NG, ETF: (UNG, UNL))
Overnight strength continued firming Monday to test the two-week old 2.85 high that had ended the last rally attempt. Closing back under 2.80 is the nearest sell signal.
Mid-day Update… Turnabout.
Target’s test fails earlier… dips deeper?
This morning’s retest of its 2739.25 bias-up target and of the 2741.00 overnight high got to 2741.25. Trending down since then fell initially to the morning’s 2733.00 bias-up signal while the bias environment was lapsing. Now it has extended to trigger the afternoon’s 2730.50 bias-down signal.
Quickly fulfilling this morning’s bias-up target allowed its earlier rejection. But the reversal’s timing was not optimal — breaking lower as late as possible, and including a couple of big blips-up, albeit temporary — so, this reversal isn’t necessarily sponsored by strong-handed sellers.
The bias-down signal was probed down to 2726.25, whose oversold RSIs were just retested. Interim support before the 2721.50 bias-down target is at 2725.25. Meanwhile, the test of 2726.25 is reacting up to attack the 2730.50 bias-down signal as resistance. Another big blip-up? Back under 2725.25 would help to confirm it’s only temporary.