Posts by Rod David
Market Wrap (recording & summary)
Overnight choppiness extended into Wednesday morning, forming a range. It was a wide range enough to represent divergent opinions, and not just noise. Even trending attempts were contained within the range.
The afternoon ranged more narrowly, and didn’t attempt trending in either direction.Breaking the afternoon’s narrow range one minute after entering the final hour was too late to be strong-handed sponsorship. Indeed, the break was brief. Not shallow, but brief. And false. It was retraced entirely, as would be expected of a late break from a directionless range.
But the retracement never actually reversed direction. The range — essentially, Wednesday’s middle — acted as resistance. Which on its own isn’t bearish. But the morning also recovered from a deep dip, without yet reversing up.
Potentially, these two failed dips are pessimism that will prove bullish from a contrarian perspective. That is, if they’re exploited early Thursday, as was already acceptable Wednesday afternoon. Delaying a rally for much longer would likely be because the decline has already resumed into the long weekend.
- 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))
After gapping down at the open, Tuesday’s close had recovered back up to Monday’s lows. Still overlapping Monday’s lower-end kept alive potential for filling the gap at its upper-end. Flat overnight ranging nevertheless resolved down sharply through Wednesday’s open. And it extended down into the afternoon testing 1.2385. A second consecutive lower close under 1.2445 Thursday would reverse the trend down. Otherwise, closing back above 1.2445 and preferably higher would end the corrective dip.
Gold Apr Contract (jUN , ETF: (GLD))
Gapping down Tuesday had managed to close at or above 1341.00 support. Wednesday broke lower to test the next two supports at 1335.50 and 1325.50. That’s a lot of selling pressure to expend between closes, which doesn’t gain traction for the effort. Closing back above 1335.50 would signal that the pullback had ended. Otherwise, closing lower Thursday would all but reinstate 1291.50.
Silver May Contract (SI, ETF: (SLV))
Closing at 16.50 Tuesday avoided triggering its sell signal there, and also required breaking under 16.40 for confirmation. Wednesday did trend down, probing under 16.40 to 16.25. A bounce has room up to 16.50 but closing back above 16.55 would signal momentum reversing up.
30-year Treasury Jun Contract (US, ETF: (TLT))
Tuesday’s break above 145-04 extended higher Wednesday morning to 146-10. Reacting down intraday to 145-28 still has room to 145-16 without invalidating the upside momentum.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Hovering for a couple of days at the highs doesn’t invalidate upside momentum, but it does suggest that extending higher requires a pullback before extending to the 66.88 target. Wednesday’s dip tested the 64.64 pullback limit down to 63.70. Closing back above 64.64 would be optimal for isolating the test, or at least rallying early Thursday.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
Tuedsay’s recovery to 2.70-2.71 resistance didn’t extend higher Wednesday, keeping alive the likelihood that its corrective bounce is ending and that the 2.62 low will be broken more aggressively on the way down to 2.52.
Mid-day Update… Normally, this would be a bottom.
Breaking lower would be an anomaly. A steep, deep, anomaly.
Overnight and post-open action hasn’t trended, but it has been very choppy. This morning’s bias signals were tested multiple times each, and that was before triggering no-bias. No-bias trending probed lower, and probed the morning’s bias-down target. The break was recovered to exit the bias environment back above its signal, neutralizing the no-bias trending.
So, while this market may be range bound, it’s not dull and lifeless, but opinionated. One of those opinions is bearish, which sellers expressed as strongly as possible without gaining traction for their effort. And that effort became trapped within the timing window that had attempted it.
Normally, that would be a bottom. Not entirely for this morning’s failed drop, but also because yesterday’s low was probed before recovering. Both held tests of Monday morning’s low. All coinciding with seasonal bullishness that begins its influence this afternoon.
2600.00 is essentially the lower-end of the range. If it’s not breaking lower, then price action into Thursday’s close is vulnerable to gravitating higher. By the same token, if that seasonality doesn’t prevent breaking the range’s lower-end, then the weekend could be greeted at sharply lower levels.
Look ahead: Economic Calendar – for Thu Mar 29, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Thursday’s calendar is busy. And it’s busy with a lot of high-profile items. Only three have a reliable track record for influencing price action, but a busy calendar can leverage the impact of other reports. Meanwhile, post-open reports are likely to react similarly to pre-open reports.
Jobless Claims
8:30 AM ET
Personal Income and Outlays
8:30 AM ET
*Chicago PMI
9:45 AM ET
Bloomberg Consumer Comfort Index
9:45 AM ET
*Consumer Sentiment
10:00 AM ET
EIA Natural Gas Report
10:30 AM ET
Baker-Hughes Rig Count
1:00 PM ET
*Patrick Harker Speaks
1:00 PM ET
Fed Balance Sheet
4:30 PM ET
Money Supply
4:30 PM ET
Afternoon Bias
| WED afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2620.25 | 2620.75 |
| …would target | 2627.75 | 2628.25 |
| Bias-down: under | 2600.50 | 2601.00 |
| …would target | 2592.50 | 2593.00 |
| Signal status: waiting for trigger | FAQ | |
| Flowcharts: Bias-UP // Bias-DN INTRO VIDEOS #1 and #2 |
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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.