Posts by Rod David
Afternoon Bias
| THU afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2733.75 | 2733.25 |
| …would target | 2738.75 | 2738.50 |
| Bias-down: under | 2724.25 | 2724.00 |
| …would target | 2718.50 | 2718.00 |
| Signal status: NO-BIAS | 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.
Post-open Review… Up to the last drop.
We’re staying with Mar ES for an extra day before rolling coverage forward to Jun, which is my practice when a new extreme for a move is forming. For reference, Jun trades at a 5-point premium to Mar…
The biggest question of the morning is the biggest because it addresses the bigger picture. It is the question of whether the bearish distributive template remains influential. Indeed, failed probes of fresh highs have defined the past 3-4 hours. 
Surging to 2733.50 before ECB, to 2736.50 before the open and retesting it afterward — each time reacting back down into the range — all qualify as distribution.
The last reaction down became the deepest, fully testing the lower-end of 2725.25-2727.75. Along the way down, the bias-up signal’s test at 10:15 invoked the grace period, which barely avoided triggering at 10:30.
Having held tests of both bias-up parameters, offsetting tests of both bias-down parameters is officially in-play. That’s not required, since the signal triggered late, and barely. But now having printed a fresh post-open low after 10:30, down is much more reliable than up. Also, there’s no “unfinished business above.”
So, until bounces stop failing and supports stop breaking, in-line with the bearish distributive template, the likely resolution is down. Resolving dramatically in either direction is still going to be difficult ahead of tomorrow morning’s Employment Situation report.
The First Trade & Pre-open Tour Recording… [Cue theme from Jaws.]
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…
Tuesday night’s reaction to Gary Cohn’s resignation had gapped down 24 points from the 2724.00 cash session close to 2700.00, then extended down to 2681.00. Wednesday’s open was greeted back at 2700.00, which then recovered to attack 2724.00 to within 1 tick. The open’s gap down was retested into the noon hour, and holding its test was rewarded by recovering to within 1 tick of Tuesday afternoon’s 2730.50 high — which was done by invalidating the afternoon’s clean bias-down signal at 1:30. Last-minute weakness finished a third consecutive session at or near the 2725.25-2727.75 corrective bounce limit.
Overnight action’s new info…
Wednesday’s last-minute weakness drifted only a little lower to 2720.00 before bouncing back to 2727.75. Choppy ranging persisted into and out of Europe’s opens, forming a chart that resembles a shark’s menacing dorsal fin protruding above the water. [Cue the Jaws theme music.] The most recent reversal back into the range has extended through its upper-end, now probing Tuesday and Wednesday afternoon’s highs up to 2733.50.
If, then…
Retesting Tuesday afternoon’s highs was a likely reward for having absorbed Wednesday’s second dip back to the open. The recovery wasn’t rejected through the close, and another test of the corrective bounce limit was held. So, the bearish template is — again — either to reject probes of fresh highs before reversing down sharply, or else to already be collapsing through the open. The latter may seem unlikely now while fresh highs are being probed, but the ECB announcement and Draghi’s press conference are just minutes away. Regardless, extending higher or trending down substantially will be difficult on the day before Friday’s pre-open Employment Situation report. Nevertheless, extending fresh highs Thursday morning would start making fresh highs at 2753.00 or 2765.00 likelier next.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2733.25 would be likely to trigger the 2731.00 bias-up signal at 10:15. Exiting the open under 2727.75 would be unlikely to trigger bias-up.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2731.75 | 2731.00 |
| …would target | 2737.00 | 2736.50 |
| Bias-down: under | 2716.00 | 2715.50 |
| …would target | 2705.75 | 2705.00 |
| Signal status: LATE NO-BIAS, TESTED BOTH BIAS-UP 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)
Was that a Wednesday Wreversal? They don’t start from extreme gaps, so no, although the three distinct legs would qualify otherwise. The setup doesn’t correlate at all to one trend’s direction or to another’s resolution. But it does reflect growing volatility, so be prepared.
Wednesday’s session was also interesting for invalidating its afternoon bias-down. Recovering 2708.00 was too late to avoid triggering, but its recovery was well-rewarded by reversing up 22 points to 2730.00. Also remarkable for having absorbed the original reaction to Gary Cohn’s resignation.
Meanwhile, Wednesday closed back in the 2725.25-2727.75 corrective bounce limit, which had also held Monday’s high and defined Tuesday’s close. So, the bearish templates are limited again to either rejecting probes of fresh highs before reversing down sharply, or else already collapsing through the open. Extending higher or trending down substantially will be difficult on the day before Friday’s pre-open Employment Situation report. But extending fresh highs Thursday morning would start making fresh highs at 2753.00 or 2765.00 likelier.
- Details and other markets coverage are discussed in the post-market Wrap recording here.
- Monitor overnight Globex trading in the chaRTroom here.