Posts by Rod David
Mid-day Update… Snowballing.
Corrective bounce opportunity fails.
Just for having tested Feb 5’s pivotal low last Friday, an eventual test of the actual low has been required. Ranging sideways for several days didn’t change that, and Thursday’s interim bounce never gained traction. Last night’s relatively shallow range did not in itself suggest fresh lows were any nearer.
But the open resolved down quickly. And the morning extended down sharply. Sharply, and substantially. Now the noon hour’s fresh low is being probed, after finally bouncing for the first time today. No-bias triggered, and was then invalidated after being probed through 1:30.
Which is the most interesting aspect to today’s drop. Beginning from much higher at 2632.00 — still 10 points under Thursday’s cash session close — dropping almost 60 points firmed into the noon hour. A fresh low during the noon hour recovered from under 2579.00. Now a fresh low after triggering no-bias has tested 2567.00. Isolated probes, when the bias-down failed to trigger, are vulnerable to being trapped in a short-squeeze.
There’s still a lot of room to recover before signaling momentum reversing up. Back above 2580.00-2583.00 during the bias environment could end the day much higher. But trying too late to recover would only trap longs for another downleg with 2509.00-2511.00 still the next lower objective.
Look ahead: Economic Calendar – for Tue Apr 3, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: This week’s calendar gets busier after Tuesday, leading into monthly payrolls. Meanwhile, there’s one low-profile and low-impact econ report, and one high-profile low-impact Fed speaker.
Neel Kashkari Speaks
MON 6:00 PM ET
Redbook
8:55 AM ET
*Neel Kashkari Speaks
9:30 AM ET
4-Week Bill Auction
11:30 AM ET
Afternoon Bias
| MON afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2588.25 | 2589.50 |
| …would target | 2600.50 | 2601.50 |
| Bias-down: under | 2570.25 | 2571.25 |
| …would target | 2555.25 | 2556.50 |
| Signal status: INVALIDATED NO-BIAS, TESTED BIAS-DOWN SIGNAL | FAQ | |
| Flowcharts: Bias-UP // Bias-DN INTRO VIDEOS #1 and #2 |
||
1. At 1:20, 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 1:20 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 1:20 would invoke a grace period through 1:30 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 1:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.
Post-open Review… And then there were none.
Neither bullish scenario tracked away from the very bearish one.
The narrow overnight range allowed for a false break lower to stretch the rubber band, and then to snap back up into the bias timing window. But 2632.00 was probed down to 2628.50 before the 60-90 minute pre-open false break window opened. 
So, the open’s blip-down couldn’t qualify as a false break either. And its reaction up to 2638.00 became the trap — for longs.
The other bullish scenario would have neutralized Thursday’s “unfinished business below” at 2625.25 and recovered Thursday’s 2627.00-2629.00 prior lows in time to trap sellers. But the post-open reaction up to 2638.00 ran out the clock for that tight maneuver.
Neither of those bullish scenarios were assured to produce more than a retest of Thursday’s high, although they could have extended. But the bearish scenario isn’t likely to be so restrained. Natural support at Wednesday’s 2605.00 cash session close is already being attacked. Last week’s lows are 10 points lower, and the prior Friday’s low is another 10 points lower than that.
There’s no bullish reason to have retraced Thursday’s rally back to its origin. Any interim bounce before extending down is likely only obligatory and temporary. Closing back above 2620.00 could still dismiss today’s drop as being a function of global illiquidity.
The First Trade & Pre-open Tour Recording… Treading carefully.
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…
Wednesday’s one or two rubber band stretches didn’t resolve Wednesday afternoon or through Thursday’s open. Better late than never? Overnight ranging had been expanding its upper-end to test 2620.00, where Thursday’s open was greeted. The open’s resolution was down 10 points, which was recovered only gradually, and didn’t even challenge the 2625.25 bias-up signal. The gradual recovery extended anyway, with its “no-bias trending” probing the 2634.50 bias-up target by 7 points. Correcting into the noon hour stopped short of retracing the morning’s 2625.25 bias-up signal before rallying again to 2659.50. The final hour’s proxy window started reversing down, extending through the close’s dip back into the noon hour’s consolidation at 2634.50. The afternoon’s rally was also no-bias trending, but only the morning’s 2625.25 bias-up signal is “unfinished business below” that still requires being retraced.
Overnight action’s new info…
Relatively narrow, choppy ranging persisted through midnight, repeatedly holding 2641.00, several ticks under Friday’s cash session close. At least bottoms had been rising, but then a drop into Europe’s opens attacked the earlier overnight lows down to 2632.00. Its gradual recovery peaked at the range’s midpoint before resolving down more steeply to fresh overnight lows attacking 2628.00.
If, then…
Friday’s final hour reversal hasn’t been retraced, let alone reversed, but neither has it extended under a prior low. Specifically, the 2627.00-2629.00 prior lows that contained the morning bias environment exit, the noon hour, and the noon hour exit. Traction gained by the afternoon rally is meanwhile intact, and not yet breaking lower through the open would make the morning likelier to bounce. Extending Friday’s bounce is possible, but not at all assured. Similarly, breaking under the overnight range after already coming within 60-90 minutes of the open could be only a rubber band stretch that snaps back up — especially if that initial stretch were to touch the 2625.25 attraction below. Otherwise, maintaining a break lower would target a retest of the prior Friday’s 2585.00 low.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2631.25 would be likely to trigger the 2635.25 bias-down signal at 10:15. Exiting the open above 2642.25 would be unlikely to trigger bias-down.