Posts by Rod David
Market Wrap (recording & summary)
It’s gonna be a loooong weekend. Although the 1987-style crash analog is already broken, one of its elements is still tracking. Nearly two weeks of decline aren’t yet even attacking the first downleg’s lows or probing below them,
so a capitulation session will encounter more support. But multi-session trending into the weekend typically extends coming out of the weekend.
Rejecting the isolation setup during the open instead of only invalidating it would have been as bearish as the setup is otherwise bullish. Notwithstanding the last two invalidated isolation setups have resolved down sharply.
Meanwhile, the overnight “failed Descending Triangle” that avoided resolving down yet during the opening 15 minutes has resolved down following the afternoon bias environment. If that’s connected, then look out below Sunday night because the pattern’s resolution tends to be substantial.
Friday’s last downleg ultimately touched 2586.00, which touches Feb 5’s 2694.75 intraday low. It’s the original decline’s Pivotal Low, the low prior to Feb 9’s 2533.00 actual low. Having probed their 2730.50 interim high, returning to the Pivotal Low all but requires retesting the actual low.
A separate measurement already identifies the low’s retest as targeting 2509.00-2511.00. Separately again, the lower objective is already in-play for closing Thursday under 2652.00. Friday’s second consecutive lower close, and closing under its room for noise down to 2627.00, confirms.
There is potential for fresh lows Monday to be recovered through the afternoon. This would trigger a multi-session recovery. But the potential for a near-term durable bottom is low.
- Details and other markets coverage are discussed in the post-market Wrap recording here.
- REMINDER: THERE IS NO SATURDAY REVIEW THIS WEEKEND. CHARTROOM WILL RE-OPEN SUNDAY NIGHT WITH GLOBEX.
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))
Gapping up Friday above the 1.2410 bounce limit that had held Thursday, was extended intraday to 1.2445 where closing any higher would target the gap above at 1.2460. Back under 1.2390 would resume the decline.
Gold Apr Contract (jUN , ETF: (GLD))
Holding 1325.50 as support Thursday allowed trending higher overnight to probe Wednesday’s FOMC reaction high. Gapping up Friday above the prior 5 weeks’ highs is now targeting a gap fill at 1355.00-1357.00.
Silver May Contract (SI, ETF: (SLV))
Thursday’s pullback to 16.40 was still being tested through the close, so not necessarily recovered. Firming overnight extended intraday to pierce Wednesday’s post-FOMC peak at 16.65 resistance.
30-year Treasury Jun Contract (US, ETF: (TLT))
The 144-22 rock and 145-04 hard place was trying to break lower into Friday’s open. Gapping down to 144-06 was recovered back into the range, pausing pessimistically short of filling the gap back up to Thursday’s 144-28 close.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Having held the 64.25 pullback limit Thursday, the rally could resume to fulfill its minimum requirement for at least one more higher close. Friday’s gap up extended to fresh highs testing 65.65, potentially fulfilling its minimum requirement.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
The longstanding 2.62 objective was finally fulfilled by Friday’s gap down that extended slightly lower. Slightly lower, and then no lower, as the session ranged narrowly, hovering optimistically above 2.62. That behavior continues to suggest that 2.62 will be broken on the way down to 2.52.
Mid-day Update… Sitting on a precipice.
Isolation setup trying to reject the late-morning collapse.
After having probed under yesterday’s lows, maintaining the open back within yesterday’s range formed an Isolation setup. It typically backs-and-fills during the morning before performing in the afternoon. 
This morning’s 2642.00-2655.00 range held until the bias environment began lapsing, and then it broke.
Lower.
Collapsing to fresh post-open lows fell back into the overnight range, testing the 2627.00-2628.00 objective. It’s too late to reject the Isolation setup, which would have been as bearish as the setup would be bullish. But it’s too early to invalidate the Isolation setup, which can be reinstated before the close.
Any development will do. Triggering this afternoon’s 2639.00 bias-up signal is a start. But that’s only a start. It was triggered, albeit late, but after the noon hour held a test of the 2627.00 bias-down signal held. The 2646.00 bias-up target has been attacked to within 1 point.
Triggering bias-up must still be productive. Currently, its reaction down has dipped to 2635.00. That’s back under the bias-up signal. Not extending or even resuming the pre-open recovery may only range sideways into the close. But not recovering also keeps the door open to resuming yesterday’s decline.
Look ahead: Economic Calendar – for Mon Mar 26, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Neither of Monday’s Fed surveys has a track record for influencing price action, although they’re high-profile — all the more for being the session’s only econ reports.
Chicago Fed National Activity Index
8:30 AM ET
Dallas Fed Mfg Survey
10:30 AM ET
3-Month Bill Auction
11:30 AM ET
6-Month Bill Auction
11:30 AM ET
2-Yr Note Auction
1:00 PM ET
Afternoon Bias
| FRI afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2638.00 | 2639.00 |
| …would target | 2645.00 | 2646.00 |
| Bias-down: under | 2626.00 | 2627.00 |
| …would target | 2619.00 | 2620.00 |
| Signal status: LATE BIAS-UP, TESTED BIAS-DOWN SIGNAL | 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.