Posts by Rod David
The First Trade & Pre-open Tour Recording… Upside intent.
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…
Gapping up Thursday was the only path higher after having failed to gain traction Wednesday. Gapping up above Wednesday afternoon’s 2655.00 bias environment high went further, forming a “session-long rally” setup. Surging through the first hour had already attacked the next higher objective at 2672.00. Two more tests of the objective held through the balance of the session, but their timing still fulfilled the setup’s requirement that all but one window probe its prior timing window’s high. A very last-minute collapse fell 8-9 points into the close.
Overnight action’s new info…
Thursday’s last-minute collapse lasted longer than that. The Globex open immediately spiked down and soon extended the drop to 10-12 points under Thursday’s late lows at 2652.00. Hovering just above this morning’s 2654.00 bias-down signal began firming by midnight, and had retraced the initial drop into Europe’s opens. The recovery extended into positive territory, already probing back above 2672.00 by 1 point.
If, then…
The morning following a session-long rally tends to extend higher. Quickly dropping 10-12 points after the Globex open made fresh highs difficult, due both to momentum and to math. Having already recovered the initial overnight drop, both momentum and math are back on the side of probing fresh highs. Gapping up or not could dictate the morning rally’s likely resolution — probing higher highs without gapping up would be doomed to failure. Gapping down is still possible, but would still be likely to rally through the morning. Sell signals will be considered anyway, especially if the bias-up signal holds its test instead of triggering.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2669.00 would be unlikely to trigger the 2672.00 bias-up signal at 10:15. Exiting the open above 2673.50 would be likely to trigger bias-up.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2672.25 | 2672.00 |
| …would target | 2681.00 | 2680.75 |
| Bias-down: under | 2654.25 | 2654.00 |
| …would target | 2648.50 | 2648.25 |
| Signal status: NO-BIAS, TESTED BIAS-UP 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)
Did Thursday thread the needle? Gapping up was the only path higher intraday. Indeed, the open gapped up above Wednesday afternoon’s 2655.00 bias environment high to form a “session-long rally” setup. But the next higher objective was likely to hold at only 2672.00 — kind of close for a session about to trend up.
In fact, 2672.00 held three intraday tests, including a very late surge to 2675.00 that nevertheless reacted down to 2662.50 through the close. But by then, the final hour had fulfilled its requirement to probe the prior timing window’s high, barely fulfilling the session-long rally setup. That final hour surge had come too late for buyers to gain traction for their efforts.
The morning following a session-long rally tends to extend higher — that doesn’t prevent a morning uptrend from reversing down into the close. Meanwhile, the morning after not gaining traction tends not to extend its rally without gapping up — probing higher highs anyway would be doomed to failure. So, higher highs Friday morning are likely. And they’re likely to be reversed down sharply if not begun by gapping up.
If the likelihood of probing higher is avoided altogether, then that would probably be due to trending down already overnight. So much of the price action under Thursday’s range has been so thoroughly tested that any probe under it could hit a deep air pocket and collapse. An afternoon reversal down from fresh highs would be vulnerable to that, anyway.
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 Mar Contract (EC, ETF: (FXE, UUP))
Thursday gapped down under the prior two sessions and fluctuated around the third prior session, The two prior sessions had trended up, so the immediate reaction down is likely to be retraced. A second consecutive lower close on Friday would instead reverse the trend to down.
Gold Jun Contract (GC, ETF: (GLD))
Wednesday’s pullback didn’t hold 1361.00 as support, and Thursday didn’t gap up above 1364.00 to resume the rally. Overnight action had fallen to test 1350.00, and the session trended down to the original 1339.00 buy signal. Rallying would be credible Friday, or else rallying Monday after having further consolidated Friday.
Silver May Contract (SI, ETF: (SLV))
Failing to close above the 16.80 objective Wednesday was retraced overnight to test 1655.00 at Thursday’s open, and to probe lower intraday. There is no bullish reason for a deeper pullback.
30-year Treasury Jun Contract (US, ETF: (TLT))
Reacting down from Wedneday’s opening test of the 146-26 target extended lower Thursday to touch 145-03 at last Friday’s low. Back above 144-26 would be credible for having ended the decline, which otherwise remains intact.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Relatively narrow overnight ranging at the 66.88 target which was tested throughout Wednesday, albeit by a normal range. Closing higher would put into play 69.50, but otherwise be aware of a potential for decline.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
Greeting Thursday’s EIA from NOT a positive of strength contributed no more or less to the session ultimately ranging narrowly sideways, still likely to break lower.
Mid-day Update… Sneak attack.
Session-long rally setup got set-up.
Maintaining the gap up above yesterday afternoon’s highs had formed a session-long rally setup. Extending it produced a fresh session high during the bias timing window. Extending into the morning bias environment probed its prior timing window high. And although it took several hours, the noon hour exit probed its prior timing wnidow’s high.
Interesting. All but one timing window tends to probe its prior timing window high on session-long rally days. Usually the noon hour is the exception, but not today. Optimism is alive and well. The open’s 16-point surge already suggested as much.
Today is a good example of excessive optimism being vulnerable. Fresh highs testing 2672.00 resistance were suddenly reversed by headlines that a strike on Syria was planned. The reaction down was far removed from the 2660.00 bias-down signal. But it was broken by 1:30, invalidating 1:20’s no-bias signal.
So, this is an invalidated no-bias environment. Its bias signals need not define either end of the window. Its bias-down target is not necessarily in-play. Oversold RSIs at the low will require an eventual retest. But nothing prevent recovering to fresh highs — whether during the final hour, or during the bias environment so that the final hour can tumble.