Posts by Rod David
The First Trade & Pre-open Tour Recording… Eerie calm.
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…
Thursday’s 2623.50 opening print was already under Wednesday’s last-minute 2629.00 low. And it quickly resolved down, eventually a lot, attacking 2591.00 at the bias environment low. Already bouncing into the noon hour was extended through the noon hour, and then a little higher to 2632.50 at the bias environment high. That was actually probed momentarily by 2 points while ranging sideways through the close, supported by 2623.50… the opening print..
Overnight action’s new info…
It’s certainly possible that the momentum of Thursday afternoon’s recovery was absorbed by the negative news story about the President’s lawyer. Or, not: Almost completely retracting its first two versions hasn’t seen any effect. Sideways ranging has been contained between 2623.00-2633.50, remaining within yesterday’s late range.
If, then…
Yesterday afternoon’s bias environment was greeted by two strong trending actions, which usually produces one more. But yesterday afternoon’s bias environment didn’t. It ranged narrowly sideways, which was least likely. This doesn’t invalidate the setup, rather it increases the stored energy, making a powerful move likely. It could have developed overnight, but narrow ranging persisted instead. If the Employment Situation report’s reaction is only shallow, then I’ll expect it to expand throughout the day. Otherwise, since no traction was gained yesterday afternoon, gapping open beyond either end of yesterday’s range is likely to extend in that direction.
First Trade…
[Click here to view the Bias parameters] No preliminary indications are considered ahead of an Employment Situation report.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2640.50 | 2638.25 |
| …would target | 2648.25 | 2646.00 |
| Bias-down: under | 2622.25 | 2620.00 |
| …would target | 2613.25 | 2611.00 |
| 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)
La plus ca change… Thursday’s 2623.50 opening print was under Wednesday’s last-minute 2629.00 low. And it quickly resolved down, eventually a lot, attacking 2591.00 at the bias environment low. Already bouncing into the noon hour was extended through the noon hour, and then a little higher to 2632.50 at the bias environment high. That was actually probed momentarily by 2 points while ranging sideways through the close, supported by 2623.50… the opening print.
That’s a big tail, as the candlestick chartists would say. A somewhat agreeable open and close, with a substantial interim trending attempt that fails. But it’s also interesting to note that the failed trending was only retraced, and not reversed. Futures settled higher, but Thursday’s cash session close was negative from Wednesday.
Headlines seemed to be forming a theme of formally ending the trade war soon, which may not be a valid read, but helps to explain why sellers became inhibited. Retracing or reversing Thursday afternoon’s recovery remains likelier than to extend it. And when an afternoon that is least likely to range sideways ranges sideways, then a powerful move is likely — perhaps already overnight.
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))
A fresh low in reaction to Wednesday’s FOMC was recovered back into the Tue-Wed range. That was maintained Thursday. Any initial strength Friday would be credible for having formed a bottom .
Gold Jun Contract (GC, ETF: (GLD))
Thursday’s gap up to test 1319.00 had probed above Wednesday’s post-close FOMC reaction, which had held under the 1316.00 bounce limit. Closing back under 1316.00 Thursday keeps alive the corrective bounce. Other than a possible favorable knee-jerk reaction to Friday’s Employment Situation report, there is no excuse for delaying its end and resolving down.
Silver Jul Contract (SI, ETF: (SLV))
Wednesday’s post-close reaction to FOMC was retraced overnight, but then retested at Thursday gap up to test 16.60. Closing back at or under Wednesday’s 16.45 high keeps alive near-term downside momentum, but not with delay.
30-year Treasury Jun Contract (US, ETF: (TLT))
Gapping up Thursday to 143-20 briefly filled Monday’s gap and probed its high up to 143-30 but closed back under Monday’s resistance. Having also hovered exclusively in positive territory, that’s “ineffectual optimism.” Friday’s Employment Situation report is not being greeted from a position of strength, other than being above the 143-07 sell signal.
Crude Oil Jun Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
There would be nothing bullish about any further backing-and-filling Thursday, or to any further delay of resolving up. Thursday tried by firming back up to 68.60, and still can’t afford to delay further improvement.
Natural Gas Jun Contract (NG, ETF: (UNG, UNL))
Gapping down to test 2.70 Thursday and holding 2.73 as resistance helps to confirm the interim bounce was only a correction, and that downside potential to 2.52 remains intact.
Mid-day Update… A toe-hold, on shale cliffs.
Massive recovery can’t afford to simply hover.
This morning’s drop eventually extended down to 2591.25. It was a retest of 2594.00, their interim bounce being the initial 2600.00 target. The target ultimately held.
An uptrending channel entered the noon hour up to 2610.00. Its reaction down was recovered by a surge that exited the noon hour at 2628.00. One more higher high into the bias environment at 2632.50 essentially fills the gap back to yesterday’s cash session close. The futures gap had filled already, having settled 5 points lower.
This is almost positive territory (basis cash). Any higher — not simply piercing or momentarily probing — would be likely to extend sharply higher on the day. The likeliest alternative is to reverse down sharply. Actually, reversing down is likelier than extending higher. Least likely is to range sideways into the close.
Back under 2625.25 (being tested now) would target at least 2607.00 today. Extending any higher would likely recover yesterday’s 2658.50 highs, and higher.