Posts by Rod David
The First Trade & Pre-open Tour Recording… Intact, so far.
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 Isolation setup had been confirmed into the weekend, signaling follow-through. Sunday night’s opening surge and Monday’s gap up acted accordingly. The open’s rally got a little ahead of itself by quickly fulfilling the morning’s 2766.50 bias-up target. But a late rejection of the 2757.00 bias-up signal only dipped to 2753.00 before resuming the Isolation setup’s rally. The balance of the session rallied relentlessly up to 2780.00 — fully recovering a last-minute dip to 2774.00 into the cash session close, and then surging another 5-6 points into the Globex open.
Overnight action’s new info…
Yesterday’s last bit of enthusiasm has been retraced, but not yet reversed. Monday’s late surge never extended any higher. It initially consolidated, with errant ticks touching 2787.00. Finally breaking lower briefly touched 2775.50, a 6-point blip-up into Europe’s opens was retraced entirely down to the low. And now lower to attack yesterday’s late 2774.00 low.
If, then…
Was Monday’s optimism immediate, relentless, or excessive? The correct answer is “D”, all of the above. Surging 13 points through yesterday’s close is representative of the entire session’s 32-34 point rally. Its excess wasn’t identified until overnight action retraced the last surge. So, is the overnight retracement beginning to reject yesterday’s optimism, or only correct it? This correct answer here can be only one, or the other. And if the overnight dip is only a correction — whether or not yet complete — then it is healthy for extending the rally higher today. Extending higher relies first on the market getting what it wants from the new Fed chair’s testimony. That could get tricky, as his 10:00 remarks may not be embargoed past 8:30 and his 10:00 appearance could discover that any positive reaction is already done. And if the remarks don’t give the rally what it wants, then its resumption would likely be detoured further by a deeper dip back down to yesterday’s morning’s “lower prior highs.”
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2771.25 would be likely to trigger the 2774.00 bias-down signal at 10:15. Exiting the open under 2780.00 would be unlikely to trigger the 2781.00 bias-up signal.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2781.25 | 2781.00 |
| …would target | 2791.00 | 2791.00 |
| Bias-down: under | 2774.00 | 2774.00 |
| …would target | 2766.25 | 2766.00 |
| Signal status: BIAS-UP | 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)
Monday afternoon’s 2774.00 bias-up target was probed by nearly 2 points before the the bias environment began lapsing. Its reaction down tested a sell signal down to 2669.50 but never triggered it before bouncing back to 2774.00 as the bias environment lapsed. Its bounce extended higher to trigger yet another upleg that tested 2780.00. Then rinse and repeat: Another reaction down held 2774.00 before another upleg surged to 2785.00 through the cash session close.
That’s pretty optimistic for being just hours away from the new Fed chair’s first congressional testimony. If the market hears what it wants on Tuesday, then a repeat of Monday’s rally could easily fulfill the 2813.00 and 2825.25-2827.75 targets.
Regardless, mind the analog to the 1987-style crash template. Its price pattern is busted, but its timing is relatively intact. Tue-Wed is the timing for its last bounce to peak, which may be a metaphor for “rounding third base.” Also note that the template identifies an inflection point, which in 1987 inflected down sharply. The same template could still be fulfilled by reversing down sharply, but not as substantially. The inflection point can also steepen the rally’s slope instead of reversing it.
- 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))
Monday’s narrow fluctuation around 1.2320 for a fourth consecutive session further confirms the pattern has lost its momentum. But the delay in rejecting its prior week’s drop from 1.2530 also suggests that fresh lows are yet to come.
Gold Apr Contract (GC, ETF: (GLD))
Rallying Sunday night to attack 1343.00 barely managed to open at 1340.00 before sliding back under 1332.00. Stopping optimistically short of filling the gap back to Friday’s 1330.50 close suggests fresh lows remain likely before any credible rally attempt. But closing back above 1335.00 might still get a benefit of the doubt for launching a new rally leg.
Silver Mar Contract (SI, ETF: (SLV))
Sunday night’s initial surged to 16.72 held week-old resistance at an outstanding gap. Monday’s open was back at or under last week’s ~16.65 prior highs, and briefly pierced negative territory 20 cents lower. That filled the gap back to Friday’s close, neutralizing its attraction, so actually closing above 16.70 would be credible for launching the new upleg that Sunday night’s surge had tried.
30-year Treasury Mar Contract (US, ETF: (TLT))
Gapping up again Monday touched 144.27 before dipping back under 144-12, which must hold as resistance to continue being only a temporary corrective bounce. Closing back under 144-30 and 143-26 would be likely next to test 143-06 and 142-18.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Probing higher Monday to attack 64.25 was on-track to already fulfill the minimum third consecutive higher close required by Thursday’s confirmed breakout. Potential to 67.05 remains intact so long as pullbacks now hold 63.45 as support.
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Monday’s narrow ranging only further delays the likely probe of fresh lows under 2.55 that would likely not extend down, but which the pattern all but requires before any recovery effort can be credible.
Mid-day Update… The way, way higher.
Morning bias rejection gets swallowed whole.
The opening surge’s test of this morning’s 2766.50 bias-up target had reversed back down to and through its 2757.00 bias-up signal. 
Rejecting tests of both bias-up parameters had put into play offsetting tests of both bias-down parameters.
Except… the rejection came late, requiring the grace period, which undermines the rejection’s reliability. And exiting the bias environment back above its bias-up signal helped to reject the rejection.
Also, the opportunity to resume the decline barely overlapped its 2755.00 signal before reversing up sharply through its 2759.00 buy signal. The latter has extended to fresh highs at 2773.00.
Now this afternoon’s 2766.00 bias-up signal has triggered. Its 2774.00 bias-up target has been met to within 4 ticks. That’s close enough for the target not to become “unfinished business above” if left outstanding. But unless the upside momentum is rejected, it’s still targeting 2813.00 and 2825.25-2827.75.