Posts by Rod David
Mid-day Update… Tug o’ War
MARKET WRAP WILL BE HELD EARLY TODAY AT 3:03 ET.
Today’s session has been willing to trigger setups. But rather than go on to fulfill them, reversal setups form. And rather than fulfill them, another reversal setup forms. Today’s range isn’t so much range bound, as it is in a tug-of-war battle to influence direction.
The overnight rally only had to maintain through the open for extending the rally to its next higher objective. But the open was greeted back under the overnight rally’s last relative low — 2669.00 — which undermined the rally’s momentum.
The opening dip was deep enough for long enough to reject tests of both bias-up parameters. That put into play offsetting tests of both bias-down parameters — 2648.75 and 2637.75 — but only got to 2652.50. And the attraction below didn’t prevent rallying…
…Rallying to fresh post-open highs into the morning bias environment into its exit. But the 2671.00 bias-up target was still being overlapped, so the morning’s bias-down parameters have become “unfinished business below.”
And now this afternoon’s 2663.25 bias-down signal has held as support to trigger another no-bias. Keeping with today’s new tradition, that didn’t prevent extending down. A pattern had formed that required fresh post-open lows, which are now being probed down to 2650.00 — which is also natural support at Friday afternoon’s high.
We have two competing influences: One is this afternoon’s no-bias environment. Probing under its 2663.25 bias-down signal came too late to trigger. It must be retraced entirely, unless the bias environment is exited under its 2655.00 bias-down target. That would help the other influence, which is this morning’s unfinished business below, at least to 2648.75.
Look ahead: Economic Calendar – for Wed Mar 28, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Wednesday’s calendar is busy, especially at 8:30 with multiple simultaneous reports. But none has a reliable track record for influencing price action, not even the only high-profile report — GDP. The late-morning Fed speaker may inject some volatility just before the noon hour.
MBA Mortgage Applications
7:00 AM ET
GDP
8:30 AM ET
International Trade in Goods
8:30 AM ET
Corporate Profits
8:30 AM ET
Retail Inventories [Advance]
8:30 AM ET
Wholesale Inventories [Advance]
8:30 AM ET
Pending Home Sales Index
10:00 AM ET
EIA Petroleum Status Report
10:30 AM ET
*Raphael Bostic Speaks
11:30 AM ET
2-Yr FRN Note Auction
11:30 AM ET
7-Yr Note Auction
1:00 PM ET
Farm Prices
3:00 PM ET
Afternoon Bias
| TUE afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2676.00 | 2677.00 |
| …would target | 2682.75 | 2684.00 |
| Bias-down: under | 2662.00 | 2663.25 |
| …would target | 2654.00 | 2655.00 |
| Signal status: 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… Tacking.
Overnight rally’s gain disappears, with consequences.
Extending 21-22 points highs overnight to attack 2680.00 had created a relative low at 2669.00. It was the reaction down from a fresh high that was, itself, recovered to a higher high. As I described during the Market Tour, there was no bullish reason to revisit it. Not holding its test through the open would be difficult to recover, if not also signal momentum reversing down.
It was already being probed before the open, down to 2666.00. The open’s blip-up attacked the 2671.00 bias-up target to within 1 tick, near enough in this environment to consider it tested. Its reaction down avoided triggering the 2663.75 bias-up signal at 10:15. Offsetting tests of BOTH bias-down parameters was put into play.
The signal has been productive since triggering, extending down to 2652.50 through the first hour. This didn’t prevent a bounce to 12-point 2664.50, but that doesn’t invalidate the bias signal. Which is exactly the point of the signal, to identify the contextual bias — that bounces are likely to resolve down.
So, the latest bounce is trying to resolve down now. Back above 2666.00 when the bias environment begins lapsing at 11:30 would give the recovery another chance. But meanwhile the likely resolution is down, to test 2648.75 if not also 2637.75.
The First Trade & Pre-open Tour Recording… Stretching and pushing it.
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…
Sunday night’s rally had all but peaked nearly 4 hours before the open. Touching, testing and probing 2634.00 had reacted down to 2626.00-2627.00 each time. One final time through Monday’s open also reacted down, but much more substantially to 2602.00. That was the morning’s bias environment. Recovering into and out of the afternoon bias environment extended sharply higher to 2662.50, probing above Friday afternoon’s ~2650.00 high. Friday morning’s 2658.50 high was still being tested at the close.
Overnight action’s new info…
Monday afternoon’s rally soon resumed after the Globex open. And it has only extended higher, including an Ascending Triangle at 2672.50 that resolved up to 2678.50 through Europe’s opens. Now a fresh high attacking 2680.00 has reacted down to test and retest 2672.50 as support.
If, then…
The reward to recovering yesterday morning’s high was a retest of Friday afternoon’s ~2650.00 high. And the reward to recovering that is a retest of two prior highs up to 2691.50. That was more than 40 points higher when 2650.00 was being tested, and now it’s only 12 points higher. The recovery is already 94 points above Friday’s late low, which is a little faster-paced for the rally than for the decline. The differential isn’t wide enough to label the rally as a “bear market bounce,” but surging beyond the open would could make the afternoon vulnerable to reversal. However, a post-open dip would be difficult to resume the rally if not absorbed quickly.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2675.00 would be likely also to exceed the 2671.00 bias-up target at 10:15 to renew the bias-up signal.