Posts by Rod David
Post-open Review… Sticking.
Negative territory isn’t being rejected.
Pre-open lows had extended to within 3 ticks of this morning’s 2652.00 bias-down target. Bouncing to within 3 ticks of the 2666.00 bias-down signal was retraced almost entirely before the open. Another bounce spiked up to almost 2664.00 but also collapsed to fresh lows at 2647.00.
Hope still springs eternal. But the springs are briefer, with more immediate consequences.
Still, the 2652.00 bias-down target held through 10:15 to avoid renewing the bias-down signal. It was still being overlapped, and it was probed, but fresh post-open highs just tested 2666.00. Being the bias-down signal, it’s test should define the bias-down environment’s upper-end. In fact, its test has reacted down to 2659.25.
Reacting down any lower would start to signal the bounce is done. It’s being probed now. Resuming the decline should not be camouflaged — at least, the slope should become obvious upon breaking under 2555.00 lower prior highs. Otherwise, fresh post-open highs should be limited to filling the gap back up to yesterday’s ~2777.00 close.
The First Trade & Pre-open Tour Recording… Uh-oh, just another day.
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…
Thursday’s decline wasn’t immediate. At least, its immediate attempt at declining was recovered to probe fresh session highs in positive territory. But the morning bias environment resumed the decline, which extended relentlessly through the afternoon. The foregoing actually describes Tuesday and Wednesday, too. But Thursday was the first to revisit the prior week’s lows, which had held a test of 2701.50, and which there was no bullish reason to revisit. Last Wednesday night’s 2682.00 low of that original test was revisited, too. The afternoon bias environment’s 2758.50 low was retraced by a late bounce up to 2689.00, ending the day at 2776.00-2778.00.
Overnight action’s new info…
Initially firming attacked 2685.00 before reacting back down to 2669.00. Europe’s opens didn’t fall apart, and 2685.00 was attacked again. It also reacted back down again, but more substantially to within tick of yesterday’s 2658.50 low. A couple of bounces individually and thoroughly tested what is this morning’s 2666.00 bias-down signal’s resistance. Resistance won, producing a probe under yesterday’s low by at least 1 point.
If, then…
After three consecutive sessions of trending down sharply, today’s session is shaping up to be just another day. Which doesn’t necessarily mean a fourth consecutive session of trending down sharply. But two days of impending illiquidity is introducing Friday Factors into the equation. So today’s fourth session should either trend down sharply on steroids, or else reverse up sharply at some point. The 3-week old low is an example of the latter, which reversed up sharply from a very late test of a prior low. The nearest similar support under yesterday’s lows isn’t encountered until 2634.00 and more likely 2620.00. And another late Friday save that reverses up sharply is always the least likely resolution. Let’s assume Pavlov’s work is complete, and no early bounce develops today — which we’ll assume so long as positive territory is avoided or rejected within minutes. Trending down sharply can meet one or both of those levels without reversing up, and still leave some steroids for Sunday night and Monday to continue tracking the 1987-style crash template.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2673.25 would be unlikely to trigger the 2666.00 bias-down signal at 10:15. Exiting the open under 2663.50 would be likely to trigger bias-down.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2693.50 | 2693.25 |
| …would target | 2705.25 | 2705.00 |
| Bias-down: under | 2666.25 | 2666.00 |
| …would target | 2652.25 | 2652.00 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET MET | 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)
Thursday’s decline closed under 2701.50. Its test and retest as support last week had held to require retracing its pullback from 2755.00. And that had extended through Tuesday’s open to 2790.00. There was no bullish reason to revisit 2701.50, but also no more likely of a bearish resolution until closing under it. Which Thursday did.
Three consecutive sessions have trended down throughout since Monday’s session had rallied throughout. Each of those ultimately bearish sessions included an early rally effort. So, none of the intraday drops qualifies as capitulation. So, has Pavlovian conditioning made buyers reluctant to try, try, try again Friday?
Meanwhile, two days of impending illiquidity creates the influences that are my Friday Factors. Those influences make Friday vulnerable to capitulating, which would have bearish implications for Monday. Gapping up Friday above 2701.50 could help to delay extending this downleg, but even that wouldn’t marginalize the threat of sellers for the day.
- 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))
Wednesday’s second consecutive close under Tuesday’s breakout — which had returned already to prior lows for no bullish reason — drifted lower overnight ahead of Fed chair Powell’s second day of congressional testimony Thursday. Gapping down was recovered to at least fluctuate choppily, not yet fulfilling the confirmed breakout’s required eventual third lower close.
Gold Apr Contract (jUN , ETF: (GLD))
Probing lower overnight ahead of Powell’s testimony gapped down Thursday to and through the 1315.00 prior low whose overnight test had previously satisfied selling pressure. Its current break now targets 1291.50, so long as bounces hold 1312.50.
Silver May Contract (SI, ETF: (SLV))
Fresh lows into Thursday’s open fulfilled the minimum objective for this leg, filling the gap back down to the low’s 16.25 close. Probing it by nearly a dime reacted up, filling the gap back to Wednesday’s 16.40 close. The gap held, both neutralizing its attraction and maintaining the drop’s momentum.
30-year Treasury Jun Contract (US, ETF: (TLT))
Rallying overnight to fresh recovery highs gapped up Thursday’s to test 144-04. Dipping back under the 143-12 bounce limit by only 6 ticks was recovered entirely to retest the gap up. Closing under 143-12 would signal momentum reversing down, confirmed under 143-24.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Reversing down hasn’t hesitated since fulfilling confirmed buy signal’s minimum upside objective. Failing its pullback limit, then triggering its sell signal, has extended down Thursday, to 60.20 support. The decline remains intact so long as bounces now hold 61.35 as resistance.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
Thursday’s EIA report wasn’t greeted from either a position of strength or of weakness. Thursday’s muted reaction bounced almost a nickel to test recent highs. But a bottoming pattern does still need a fresh low and its recovery for a rally attempt to be credible.