Posts by Rod David
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2704.50 | 2703.00 |
| …would target | 2714.75 | 2713.50 |
| Bias-down: under | 2685.25 | 2684.00 |
| …would target | 2676.50 | 2675.00 |
| Signal status: BIAS-UP, BIAS-UP TARGET MET | FAQ | |
| NEW! Flowcharts: Bias-UP // Bias-DN INTRO VIDEOS #1 and #2 |
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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)
The overnight rally ahead of Wednesday’s open had been consolidating around a higher objective at 2673.75 that was made likely by Tuesday’s intraday rally. The open was vulnerable to early strength being reversed early, the same pattern that had been warning us before January of an impending reversal. But the setup never triggered, as the reaction to CPI triggered a 49-point plunge.
A 49-point pre-open plunge is retraced entirely during the session’s first hour. An environment capable of one large leg is capable of multiple large legs, not just one more. So, the afternoon added another 25 points. testing the next higher objective above 2673.75 and 2684.00 and 2698.00-2700.00.
The afternoon bias environment was entered at its renewed bias-up target. A lot of buying pressure had been fulfilled, offering an opportunity for a corrective dip to refuel buyers. The rally didn’t exploit the opportunity. Instead, impatient buying extended the rally.
A similar setup before the close (I describe it at the end of the Market Wrap recording) did the same thing, albeit on a much smaller scale. Size doesn’t matter, only that buyers were still anxious to get long, in a manner that suggests they are weak-handed.
So, an overnight pullback is not only a vulnerability, but a likelihood. Opening Thursday deeply enough could invert Wednesday’s closing WedEX from bullish to bearish. We would then expect trending down into Friday afternoon through Monday morning, perhaps earlier. Otherwise, shallow or no opening weakness Thursday could extend the rally considerably higher into and out of the weekend.
- 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 knee-jerk reaction down to CPI filled the gap back to Monday’s close down to 1.2300 and reversed up to retrace the reaction. The reversal extended sharply to 1.2465 resistance, needing to close above 1.2435 to maintain the rally’s momentum.
Gold Apr Contract (GC, ETF: (GLD))
Confirming Monday’s breakout on Tuesday didn’t prevent Wednesday’s knee-jerk reaction down to CPI, even after having probed fresh highs overnight above 1339.00. But the dip to 1319.00 was recovered entirely and well into positive territory attacking 1359.00. Holding 1350.50 as support keeps the rally alive, next targeting 1366.00. Back under 1341.00 would reverse momentum back down.
Silver Mar Contract (SI, ETF: (SLV))
Lagging to the upside on Tuesday limited Wednesday’s CPI reaction to Monday’s post-open low. But its recovery participated in probing fresh highs, attacking the minimum 16.95 objective to within a nickel. Holding 16.80 keeps alive momentum to 17.11 and 17.40.
30-year Treasury Mar Contract (US, ETF: (TLT))
Fluctuating around and above 144-12 for a couple of days created a position of strength for the expected retest of Sunday night’s 143-04 low to hold. Wednesday’s CPI reaction probed it down to 149-09, which doesn’t equate to being a buy signal, but now recovering 144-12 would seal a bottom.
Crude Oil Mar Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Tuesday’s retest of Friday’s 58.10 low was itself retested at Wednesday’s open. But it didn’t break lower, and only bounced back to 59.80, then higher. It is not a bottoming pattern, but a corrective bounce does have room up to 60.75 before suggesting the downside momentum is lapsing.
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Wednesday’s opening weakness filled the gap back down to Monday’s close and held. Thursday’s rally isn’t being greeted from the position of weakness of having “unfinished business below,” but already reversing up would have been bullish.
Mid-day Update… Break on through.
Overnight pre-plunge highs being exceeded.
Retracing the pre-open 49-point plunge from its 2627.00 low greeted the open at 2645.50, then retraced the rest by 2 extra points to 2679.50 soon after the session’s first hour lapsed. Ranging choppily flat-to-higher through the bias environment finally resumed trending coming out of the noon hour. Fresh highs have touched 2694.50.
Completing the retracement was no reason to expect trending attempts to end. Rather, the two legs told us that this environment is vulnerable to wide moves. The latest 17 points could suffice, or it could add another 4-6 points and attack or retest 2700.00.
RSIs diverged negatively on the latest blip-up to fresh highs, so upside momentum is being challenged. A pullback during the bias-up environment has room down to its 2676.75 bias-up signal just as noise without damaging the uptrend. But reversing down to 2676.75 AFTER the bias-up environment lapses would be less assured of recovering, and not protected from retracing much of the intraday rally.
Look ahead: Economic Calendar – for Thu Feb 15, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Thursday’s Jobless Claims stopped being influential more than a year ago. But its recent record lows may change that, making any increase more of a surprise that impacts price action. Meanwhile, the only influential Fed Survey is released simultaneously with another survey, and with the high-profile and influential PPI.
Jobless Claims
8:30 AM ET
*Philadelphia Fed Business Outlook Survey
8:30 AM ET
*PPI-FD
8:30 AM ET
Empire State Mfg Survey
8:30 AM ET
Industrial Production
9:15 AM ET
Bloomberg Consumer Comfort Index
9:45 AM ET
Housing Market Index
10:00 AM ET
EIA Natural Gas Report
10:30 AM ET
Treasury International Capital
4:00 PM ET
Fed Balance Sheet
4:30 PM ET
Money Supply
4:30 PM ET