Posts by Rod David
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))
Four sessions spent ranging around 1.2320 had already missed the earlier opportunity to reject the drop that began the ranging. Tuesday’s break lower to the two-week old 1.2235 prior low, which has no bullish reason to be retested.
Gold Apr Contract (GC, ETF: (GLD))
Rejecting Sunday night’s surge before Monday’s open, and then stopping optimistically short of filling the gap back down to Friday’s close, had made fresh lows likely. Tuesday morning’s reaction to the new Fed chair’s testimony triggered a break under last week’s 1325.00 low, attacking the two-week old prior lows at 1313.50.
Silver Mar Contract (SI, ETF: (SLV))
Breaking under 16.40 Tuesday puts into play a retest of the prior low at 16.15 and its gap outstanding there. Meanwhile, an intraday bounce can test 16.45 without reversing momentum up so long as the close is back under 16.40.
30-year Treasury Mar Contract (US, ETF: (TLT))
Gapping down Tuesday under 143-30 only briefly blipped-down before bouncing 1 point to retest the 144-12 bounce limit as resistance. Its reaction down to fresh lows filled the gap back down to Thursday’s 143-06 close. Still outstanding is the gap back down to Wednesday’s 142-20 close.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Having fulfilled its minimum requirement for at least one more higher close on Monday, Tuesday’s dip under the 63.45 pullback limit. There’s still room down to 62.25 before triggering a reversal down that takes off the table a higher high up to 57.05.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
[Rolling coverage forward to May, which trades at a 1-cent discount to Mar]… Still hovering under 2.69 keeps alive the likelihood of at least momentarily probing a fresh low under 2.54 before a recovery effort would be credible.
Mid-day Update… At home in the range.
Is the market hovering into Thursday morning?
The reaction down from attacking 2790.00 had first fallen to 2766.00. Its reaction failed, and fresh lows tested 2757.00. That’s not an arbitrary low. Recall that rallying into the two-week old high had targeted 2753.25 and 2757.00. Only the former was tested up to 2755.00. Now that area is support.
Its reaction up to 2773.00 suggests the market recognizes this support. The reaction’s peak under this afternoon’s 2775.25 bias-up signal suggests the market isn’t yet comfortable with this support.
2757.00 can be tested down to 2753.25 without even suggesting a more substantial downleg is underway. Ranging through today and tomorrow wouldn’t be surprising, in between Fed chair Powell’s House and Senate testimonies. Meanwhile, the range’s upper-end could test 2791.00.
Breaking under 2753.25 through a relevant timing window would instead suggest the 1987-style crash template is developing. Its greatest window of vulnerability is today and tomorrow. Its potential downside could be avoided, or replaced by a surge of equal proportion, if left to develop organically. But the current pattern is fragile enough — extended and holding resistance with no further upside requirement — not to tolerate a very negative headline.
Look ahead: Economic Calendar – for Wed Feb 28, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Wednesday’s pre-open GDP is high-profile, but not reliable for influencing price action. Any reaction to it would likely be duplicated by post-open reports. The PMI is influential, and the reaction to its public release tends to duplicate its private release to institutional subscribers.
MBA Mortgage Applications
7:00 AM ET
GDP
8:30 AM ET
*Chicago PMI
9:45 AM ET
Pending Home Sales Index
10:00 AM ET
EIA Petroleum Status Report
10:30 AM ET
Afternoon Bias
| TUE afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2775.50 | 2775.25 |
| …would target | 2782.00 | 2782.00 |
| Bias-down: under | 2760.75 | 2760.75 |
| …would target | 2752.50 | 2752.25 |
| 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… Fully discounted.
Fresh highs falling short.
The new Fed chair’s remarks were released at 8:30 and the market dipped several points to test 2776.00. But it held the range. Bouncing into and out of the open encountered another dip that only attacked 2776.00. It also held the range.
The second dip’s potential to break lower ran out of time as Powell took his seat. 
The market reacted favorably and rallied to a fresh high. The 2781.00 bias-up signal triggered along the way and came within 5 ticks of its 2791.00 target.
The Isolation setup required only a fresh high.
And that was all they got, before being overcome by being fully discounted. No longer was the testimony being welcomed, or being absorbed. It had been influential, first in anticipation and then in fact. Its sponsorship was no longer strong-handed enough to defend it, and price reversed down sharply.
This morning’s 2766.00 bias-down target was attacked to within 1 tick. Oversold RSIs still have potential for retesting the low down to 2764.65. Otherwise, exiting the bias environment back above its 2774.00 bias-down signal would suggest that sellers were absorbed. The 2791.00 bias-up target would become “unfinished business above.”