Posts by Rod David
Afternoon Bias
| FRI afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2796.00 | 2796.50 |
| …would target | 2802.50 | 2803.00 |
| Bias-down: under | 2786.00 | 2786.50 |
| …would target | 2780.50 | 2781.00 |
| Signal status: noN-BIAS, TESTED BIAS-DOWN SIGNAL | FAQ | |
| NEW! Flowcharts: Bias-UP // Bias-DN INTRO VIDEOS #1 and #2 |
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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… De-fense.
Testing the lowest-lower end of the range.
The Employment Situation report was greeted by a Rising Wedge attacking 2807.00. The knee-jerk reaction down to 2800.00 avoided retracing the Wedge before recovering 
to a higher high at 2810.00. Which was essentially the bullish scenario I had described… for post-open action.
But this was still pre-open. The new day’s buyers weren’t getting enthusiastic at sellers waning. The overnight sellers weren’t still pressuring price down. So, the bounce was retraced back into the wedge. And the hesitation at extending down only aggravated potential buyers instead of encouraging them.
The minimum consequence to not recovering was to retrace the Wedge’s 2797.00 low, probably down to the next lower objective at 2793.50. It actually extended to 2789.25.
A bounce up to 2801.00 is trying to re-open the door to making buyers enthusiastic again. And we’ll know they are if the bias environment exit is recovering 2805.00. Otherwise, back under 2795.50 again could marginalize buyers for the day.
The First Trade & Pre-open Tour Recording… First impressions last longest.
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…
Despite an interim rally to 2837.50, Wednesday’s late test of 2814.50 down to 2813.00 was probed back down to 2809.50 just before Thursday’s open. Its reaction recovered 2814.50 into the open, and eventually attacked 2837.50 into the afternoon’s bias environment. Its attack was poorly timed, and bonds probing new lows set the tone for another drop back down to Wednesday’s 2813.00 low. Although there was no bullish reason for the area’s revisit, the close bounced and attacked 2824.00.
Overnight action’s new info…
Post-close high-profile earnings (AMZN, AAPL, GOOGL) repeated the after-hours volatility that has become almost normal this week. But the initial Globex bounce up to 2831.00 was reversed back down to Thursday’s late 2812.50 low. Ranging at 2815-2821 gave way as Europe’s opens triggered a collapsed to 2797.00. Its reaction up to 2806.00 has been narrowing to form an Ascending Triangle.
If, then…
Of course, the bullish scenario is that this week’s selling has become more pessimistic than the news can justify. Which could be true, if this week’s selling were triggered by pessimism. But to the degree that it was “triggered,” excessive optimism better defines the origin’s sentiment. Pessimism has surely developed along the way down, and now there’s potential for having overly-discounted its sentiment ahead of this morning’s Employment Situation report. But optimism seems alive and well with the after-hours bounces among yesterday’s post-close earnings plunges. The most bullish scenario would recover enough pre-open to isolate the probe of fresh lows to the overnight — and also maintain and extend the recovery through the open. Another bullish scenario would quickly test the next lower objectives at 2805.00 and possibly 2793.50 and also quickly recover through the open. The weekend’s impending illiquidity can exaggerate the morning’s action in either direction, so first impressions may be lasting.
First Trade…
[Click here to view the Bias parameters] Preliminary levels are not considered on Employment Situation report days.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2827.00 | 2827.75 |
| …would target | 2833.50 | 2834.25 |
| Bias-down: under | 2815.00 | 2815.75 |
| …would target | 2807.25 | 2808.00 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET EXCEEDED | 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)
Thursday afternoon’s volatility was somewhat surprising, but it’s not. I had anticipated a choppy morning and a subdued afternoon, almost paralyzed by anxiousness ahead of post-close earnings and pre-open payrolls. But bonds collapsed, paling future developments by comparison.
And bonds aren’t finished probing lower. Perhaps in the near-term they’ve overextended and Friday’s Employment Situation report will have only a brief shallow effect before S&Ps finally run out of sellers for this downleg. Next lower objectives are 2805.00 and 2793.50 before getting more aggressive.
Otherwise, like Thursday, Friday’s open isn’t likely to recover the 2835.00 line in the sand that would all but ensure momentum reversing up. But unlike Thursday, simply rallying out of Friday’s open — however shallow — could leverage Friday Factors to squeeze out a rally anyway.
Meanwhile, initially negative knee-jerk reactions to earnings (AMZN, AAPL, GOOGL) were reduced or reversed. That behavior was excessive optimism when the market did it on a Wednesday afternoon. Now it can be bullish if maintained through a Friday open.
- Details and other markets coverage are discussed in the post-market Wrap recording here.
- Monitor overnight Globex trading in the chaRTroom here.