Posts by Rod David
Market Wrap (recording & summary)
Having conditioned the morning crowd not to buy, Pavlov may be on to something more sinister by leaving the cage door open to buy in the afternoon. One headline I saw, which I try not to see lest they be an influence, called Friday a “massive short-squeeze.” I don’t dispute that Friday’s ultimate resolution was up. But Friday’s similarity to a short-squeeze pretty much begins and ends there.
Ranging 47 points from low-to-high is wide, but less than 25% of it was in positive territory. And that was thanks to the last half-hour’s breakout to fresh session highs, after having fluctuated around unchanged since noon.
Now, it’s true that I did label that late breakout as a sort of short-squeeze, but certainly not the entire session. And then, only to label its sponsorship as being earlier shorts that were reducing exposure into the weekend’s illquidity. Their catalyst is a Friday Factor, and I’m not sure any other day of the week would have been motivated to end the day trending away from unchanged.
So, Friday’s late breakout originated too late to be reliable for extending higher. And avoiding a fourth consecutive intraday downtrend doesn’t prevent resuming them out of the weekend. .
- Details and other markets coverage are discussed in the post-market Wrap recording here.
- I’LL EMAIL LINKS IN THE MORNING TO JOIN THIS WEEKEND’S SATURDAY REVIEW.
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))
Recovering Thursday’s gap down to fresh lows through the close was extended higher overnight and through Friday’s open to fully test its 1.2340 bounce potential. Tuesday’s confirmed breakout still requires at least an eventual third lower close, which closing under 1.2340 would trigger.
Gold Apr Contract (jUN , ETF: (GLD))
Rallying overnight prevented the 1313.50 sell signal from being confirmed Friday, but its reversal held resistance at 1325.00, and breaking back under 1312.50 would reinstate the decline’s momentum.
Silver May Contract (SI, ETF: (SLV))
Having fulfilled the decline’s minimum objective of filling the three-week old gap down to 16.25, an overnight bounce extended through Friday’s open and tested the 16.55 bounce limit. It held, closing back under 16.50 to avoid reversing momentum up.
30-year Treasury Jun Contract (US, ETF: (TLT))
Probing slightly higher overnight was reversed down through Friday morning to test what had been the 143-12 bounce limit, which is now a sell signal if triggered through the close.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Wednesday’s drop to 60.25 support had reacted up Thursday to touch the decline’s 61.35 bounce limit. Reacting down overnight and through Friday morning returned to 60.25, and the balance of the session fluctuated between the two into the weekend.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
Still testing prior highs at 2.74 has created two paths down — either to collapse under 2.69, or else for a blip-up to 2.81 to snap back down into a drop to fresh lows where a bottom can form.
Mid-day Update… Collectively reaching for towels.
Disaster seemingly averted. But, what happens without a reward?
Congratulations are in order for absorbing an ugly open that could have led to an uglier morning and the ugliest of days. Expending so much selling pressure so early helped the 2652.00 bias-down target hold against the remaining sellers. That wasn’t pretty, either, but eventually the alternative to extending down was to retrace up. The bias environment peaked upon filling the gap back up to yesterday’s ~2677.00 close.
Its reaction down only attacked the 2652.00 bias-down signal. Another bounce up to the 2677.00 gaps eventually trended up into and through the noon hour to 2685.00. But no later and no higher. Reversing down under the afternoon’s 2680.25 bias-up signal avoided triggering it. Extending lower held a test of the 2666.00 bias-down signal down, required to hold during a no-bias environment.
So, is that it? Is the only reward for having absorbed the ugly open just a return to unchanged? Don’t get me wrong — we should all be thankful every day not to be thrown into the fiery pits. But being dangled just above them seems closer to punishment than salvation. Especially into the weekend, when the market collectively begins realizing that to stand still is to fall behind.
The no-bias environment is now within view of lapsing at 2:30. It won’t be too early to break back under 2666.00 and lower into the close. Neither is it too early to break back above this afternoon’s 2680.25 bias-up signal, which is being tested now. And not extending higher is to fall. (Apologies to Bucky Fuller.)
Look ahead: Economic Calendar – for Mon, Mar 5, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Monday’s two econ reports are high-profile, but not reliable for influencing price action. Still, their reactions can be predictive for the week’s sentiment, as it approaches Friday’s payrolls.
PMI Services Index
9:45 AM ET
ISM Non-Mfg Index
10:00 AM ET
3-Month Bill Auction
11:30 AM ET
6-Month Bill Auction
11:30 AM ET
TD Ameritrade IMX
12:30 PM ET
Afternoon Bias
| FRI afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2680.75 | 2680.50 |
| …would target | 2690.25 | 2690.00 |
| Bias-down: under | 2666.25 | 2666.00 |
| …would target | 2655.25 | 2655.00 |
| Signal status: NO-BIAS, TESTED BIAS-UP 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.