Posts by Rod David
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2654.75 | 2653.25 |
| …would target | 2662.75 | 2661.25 |
| Bias-down: under | 2644.00 | 2642.75 |
| …would target | 2636.50 | 2635.25 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET MET | 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)
The topping pattern that would have been credible Thursday finally played out Monday. So, why is it suspicious? One word: CATALYST.
Attacking or testing 2677.00 last week would have sufficed to expend all currently available buying pressure. Reversing down from its test would have sufficed to signal counter-trend sponsorship taking control. Delaying its reversal made fresh highs likelier, up to at least 2681.00, which was tested and attacked Sunday night and Monday morning. The bias environment lapsed back under 2677.00.
Oh, and the decline extended down another 32 points to 2646.00. So, bearish?
Bearish behavior, for sure. But the reversal’s durability is a function of its origin and its sponsorship. Its catalyst was not simply a failed attempt to resume the rally. The open’s consolidation above 2677.00 had created a position of strength likely to probe even higher. A news headline prevented that, and more of the same news extended the reversal.
An artificial catalyst often crowds out organic sponsorship, which is then left unfulfilled. Monday’s decline didn’t gain traction, so gapping up above 2658.50 Tuesday could reverse the trend back up to probe fresh highs up to 2684.25. That said, and artificial catalyst can still be productive, so not yet reversing up through Tuesday’s open would next target 2635.00-2638.00.
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 “inside day” isn’t a buy signal, and it doesn’t prevent probing fresh lows Tuesday. But recovering from fresh lows Tuesday at this stage of the pattern would form a bottom.
Gold Jun Contract (GC, ETF: (GLD))
Gapping down to fresh lows Monday under 1311.00 was recovered back above Thursday’s 1316.00 low to nearly fill the gap back to Friday’s 1323.00 close. The gap down under all prior lows was filled by a reaction along the way. Upside follow-through Tuesday could prevent extending the decline, which otherwise remains intact.
Silver Jul Contract (SI, ETF: (SLV))
Monday’s open gapped down to fresh lows under 16.30 and tested 16.22, but recovered to fill the gap back to Friday’s 16.42 close. Closing under 16.40 all but confirms a new downleg underway.
30-year Treasury Jun Contract (US, ETF: (TLT))
Fresh recovery highs Tuesday fulfilled a test of 143-17 up to 143-22 which retraces the recent decline’s Falling Wedge. Back under 143-12 would suggest the bounce had ended, and under 142.26 would resume the decline.
Crude Oil Jun Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
An ongoing narrow(ing) range had been developing at the midpoint of the past week’s activity. Early weakness coming out of the weekend slipped to 67.17 before hawkish developments against Iran triggered an attack on the rally’s 69.50 target at the range’s upper-end. Its reaction down to 68.35 held lower prior highs, which must not delay launching another upleg if valid.
Natural Gas Jun Contract (NG, ETF: (UNG, UNL))
Spiking down through 2.77 at Monday’s open bounced off of 2.72 to almost unchanged, keeping alive the potential for a late pullback underway.
Mid-day Update… Sneak attack.
Focus on Iran pushes price down… to support?
The catalyst for this morning’s drop was notice of a press conference that would be viewed as anti-Iran deal. And anything anti-Iran deal is viewed as a reason to sell.
Despite holding tests of room for noise up to 2681.00, the open’s consolidation above 2677.00 had created a position of strength.
Not that it could prevent reacting down, but reacting down would likely recover. Reacting down to 2672.00 did recover back into the range above 2677.00, retracing it by 38.2% — not 61.8% — and triggering no-bias instead of bias-up.
The noon hour’s entry attacked the 2662.25 no-bias objective. The noon hour probed it to within 1 point of the afternoon’s 2653.25 bias-down target. That’s a lot of selling pressure.
Like this morning’s bias-up signal, this afternoon’s 2661.50 bias-down signal test invoked the grace period. Unlike this morning, the grace period is still testing the signal to trigger noN-bias. It’s possible the timing window was impacted by Netanyahu’s actual press conference. Having fulfilled the bias-down target to within 1 point, rallying would be credible — especially with the press conference now having ended.
Already 2664.50 is being tested. All of this morning’s drop can be recovered for being a reaction to non-market news. But now having tried to recover, triggering another sell signal after already reacting down from 2681.00 could launch the next downleg.
Look ahead: Economic Calendar – for Tue May 1, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Tuesday’s last two post-open econ reports are high-profile and announced simultaneously. One of those two reports and the earlier post-open report are reliable for influencing price action. And all reflect the production side of the economy. Any noticeable reaction to an earlier report is likely to be duplicated in reaction to a later report.
Redbook
8:55 AM ET
*PMI Manufacturing Index
9:45 AM ET
*ISM Mfg Index
10:00 AM ET
Construction Spending
10:00 AM ET
4-Week Bill Auction
11:30 AM ET