Posts by Rod David
Post-open Review… Surviving.
Overnight drop rejected, barely.
The overnight drop has been rejected. The hours-long consolidation at this morning’s 2640.25 bias-down target had broken sharply lower to 2626.00. Price action around the low formed an Inverted Head & Shoulders pattern. 
My pre-open update in the chaRTroom noted the pattern’s potential to break falsely in one direction, and then reverse more substantially in the opposite direction.
But being an overnight pattern, its reversal had to develop during the opening 15 minutes of volatility. After that, the overnight pattern’s properties won’t apply intraday.
Greeting the open at the 2640.25 bias-down target, i.e. resistance, was the optimal opportunity for reversing back down. But it held. After not responding to resistance, the opening 15 minutes of volatility extended higher. Sellers were all but marginalized.
The 2649.00 bias-down signal’s test within 3 minutes of 10:15 invoked the grace period. Extending higher through 10:30 to 2654.00 has triggered “late no-bias.” Rejecting tests of both bias-down parameters puts into play offsetting tests of both 2663.00 and 2670.50 bias-up parameters. Their tests aren’t required, since the bias triggered late.
The gap back to yesterday’s 2655.00-2656.50 close may offer resistance. It’s also an attraction, and still likely to be probed up to at least 2663.00. Any more upside would be difficult, with the Zuckerberg hearing underway. Retracing or backing-and-filling would be credible, but not reversing the trend back down.
The First Trade & Pre-open Tour Recording… Backing down.
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…
Rallying sharply early Monday night had retraced all of Monday afternoon’s 43-point collapse up to 2658.00. Its reaction down to 2638.00 defined the trading range that would last through midnight, and intraday Tuesday — albeit widening along the way to 2635.00-2666.00. No traction was gained for the effort, especially when trending became unlikely during Zuckerberg’s congressional testimony. There was enough optimism to try breaking higher, but the overnight highs held.
Overnight action’s new info…
Probably in reaction to reports of an impending Syria strike, the first Globex move attacked the range’s lows down to this morning’s 2640.25 bias-down target. And then stopped for a long time, hovering optimistically short of yesterday’s intraday lows. Ranging narrowly up to 2644.00, for hours and hours, and well after Europe’s opens did eventually blip-down momentarily to 2637.00. That proved to be a warning shot, as price has collapsed to 2626.00, well under yesterday’s lows, presumably still anticipating intervention in Syria.
If, then…
Having gained no traction for its efforts Tuesday, extending the rally Wednesday required gapping up. That’s not happening. Meanwhile, the likelier scenario of retracing Monday night’s recovery is playing out. Greeting Wednesday’s open under range’s lows isn’t in itself bearish, unless maintained through the open. Any trending likelier earlier rather than later. Price action can become inhibited ahead of the afternoon’s FOMC Minutes. But even its impact may be muted unless containing a glaring surprise to influence price action. Traders may again be distracted by Zuckerberg’s second congressional appearance. Between his likely adaptation after yesterday’s round, and today’s crew trying to one-up yesterday’s inquisitors, promises to offer more gotcha’s on either side of the witness stand.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2637.50 would be likely also not to recover the 2640.25 bias-down target by 10:15, renewing the bias-down signal. Exiting the open under 2644.00 would be likely at least to trigger bias-down.
Morning Bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2663.25 | 2663.00 |
| …would target | 2671.00 | 2670.50 |
| Bias-down: under | 2649.50 | 2649.00 |
| …would target | 2640.50 | 2640.25 |
| Signal status: LATE NO-BIAS, TESTED BOTH BIAS-DOWN PARAMETERS | 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)
Optimism was alive and well Tuesday. Overnight action waited only for the Chinese Premier’s speech before starting to recover all of Monday afternoon’s 43-point collapse. Monday afternoon’s high and Friday morning’s post-open high resisted the overnight recovery, and Tuesday morning probed higher. A deep 27-point reversal was isolated to the noon hour and then recovered to even higher highs.
But the session didn’t trend. Zukerberg’s late appearance inhibited sponsorship from actually trending higher. Optimism prevented trending back down. But the lack of trending does not equate to basing. Simply hovering throughout the day is no likelier to resolve up than to resolve down.
The rally gained no traction for its efforts Tuesday. Extending the rally Wednesday would require gapping up, probably above last Thursday’s 2672.00 highs. Meanwhile, the pattern remains vulnerable overnight to retracing Monday night’s recovery of its afternoon decline, and to greeting Wednesday’s open back at Monday afternoon’s lows.
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))
Spiking up very late before Tuesday’s open through the 1.2390 buy signal tested 1.2425 resistance, whose confirmed break would target 1.2480 and 1.2530. The noon hour retraced back down to Monday’s “lower prior highs” at 1.2390.
Gold Jun Contract (GC, ETF: (GLD))
Firming further at Tuesday’s open tested 1344.00, whose recovery would target the gap above back to 1360.00. Closing under 1333.00 would resume the decline.
Silver May Contract (SI, ETF: (SLV))
Extending higher Tuesday morning probed 16.55 resistance, and makes a retest of prior highs up to 16.80 likely. Closing back under 16.40 would reverse the trend down.
30-year Treasury Jun Contract (US, ETF: (TLT))
Flat-to-higher ranging briefly pierced Friday’s 146-02 high, still getting a benefit of the doubt for extending to fill the gap back up to last Monday’s 146-24 close.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Monday’s gap up to the 62.62 pullback limit had extended to the thoroughly tested 63.60 gap. Surging overnight gapped up to the 64.25 buy signal and extended to test 65.50. The 66.88 target is in-play.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
Monday’s bounce was retraced Tuesday morning back down to Monday’s lows, still likely to probe the pullback’s original 2.62 low on the way down to 2.52.