Posts by Rod David
The First Trade & Pre-open Tour Recording… Delay of game, over.
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…
Wednesday’s gap up above Tuesday afternoon’s ~2831.50 highs extended higher to attack 2840.00. That was 16 points above Tuesday’s close. Bullish? It was still essentially within Tuesday’s range, which was very wide and able to make bounces seem like strength. It was also a return of the ongoing 2-3 week pattern of rejecting early strength early — the setup that had told us last week the rally had become distributive. Its reaction down into the noon hour stopped 1 point short of filling the gap back to Tuesday’s ~2824.00 close. That optimism later proved bearish from a contrarian perspective. The initially favorable knee-jerk reaction to the afternoon’s FOMC policy statement was reversed down hard from 2835.00 to fresh lows at 2813.00. RSIs diverged positively on a retest of 2813.00, launching a late bounce above 2820.00 to trigger a rally with room up to 2830.00. It attacked 2832.00. the close reacted down to 2824-2825.
Overnight action’s new info…
Initially extending up to 2835.00 formed a Symmetrical Triangle that broke higher to 2837.25. The pattern’s breakouts are often false, and reversed more substantially in the opposite direction. As was this one, which retraced the breakout into Europe’s opens, and has since fallen to 2825.00. Which, regardless of the degree and duration of the drop, is back to unchanged from yesterday’s close.
If, then…
I was unavailable for more than annotating the live chart yesterday afternoon. But the market was accommodating enough to fulfill the eventual offsetting test of the morning’s bias-up target down to its 2814.50 bias-down target. The morning’s bias-up signal was never rejected to actually put that into play, although its support was likely to be influential if tested. And its support was influential in producing the late bounce. While that bounce put the market into proximity of gapping up Thursday above 2835.00 to reject the traction gained by yesterday afternoon’s sellers, it also expended valuable buying pressure. Gapping up any shallower — or not gapping up at all, still could probe lower lows down to 2805.00 or 2793.50.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2827.75 would be unlikely to trigger the 2824.00 bias-down signal at 10:15. Exiting the open under 2827.75 would be unlikely to trigger the 2830.00 bias-up signal.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2829.25 | 2830.00 |
| …would target | 2835.75 | 2836.50 |
| Bias-down: under | 2822.75 | 2823.50 |
| …would target | 2817.75 | 2818.50 |
| Signal status: LATE BIAS-DOWN, BIAS-DOWN TARGET MET | FAQ | |
| NEW! 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 (NO recording & EARLY summary)
The initially favorable knee-jerk reaction to the afternoon’s FOMC policy statement was actually a little delayed. But it wasn’t a knee-jerk reaction down, and that was apparently reason enough to attract a 6-7 point buying surge attacking 2835.00. A brief surge, because that’s not enough reason to extend. Instead, the rubber band had been stretched, and it snapped down hard — extending to fresh lows at 2813.00.
RSIs diverged positively on a retest of 2813.00, but it had become too late to attract counter-trend sponsorship. Also, sellers gained traction by exiting the bias environment under the noon hour’s low, and then entering the final hour lower still. Gapping up Thursday above 2835.00 would invalidate that downside traction, but any shallower would be difficult to avoid probing another fresh low.
A late bounce underway as of this writing is attacking 2824.00 and has room up to 2830.00. Either would still be plausible for extending higher to gap up. But reacting back down into the close could be compelling for a hold-short, to at least probe lower lows overnight down to 2805.00 or 2793.50.
- There was no Market Wrap.
- 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 gapped up to test Tuesday’s 1.2480 resistance test of Friday’s highs, which had held,. Wednesday’s test also reversed back into the range ahead of the afternoon’s FOMC news, and then into negative territory to signal momentum reversing down.
Gold Apr Contract (GC, ETF: (GLD))
Gapping up Wednesday within Tuesday’s range didn’t ensure extending higher, especially after Tuesday’s initial surge initially ended in negative territory. The otherwise inside day greeted FOMC and then dipped to fresh lows under the 1341.00 pullback limit. Retracing back up overnight would be reliable for retesting last week’s highs.
Silver Mar Contract (SI, ETF: (SLV))
Wednesday’s gap up attacked the 17.30 buy signal which held its morning test ahead of FOMC. Reacting down attacked the rally’s 17.11 pullback limit, whose break through the close during regular trading hours would be likely to extend down.
30-year Treasury Mar Contract (US, ETF: (TLT))
Bouncing overnight after having confirmed a breakout was already doomed to failure. It was already reversed back down to Tuesday’s low ahead of the afternoon’s FOMC, and then lower in reaction. Fulfilling the minimum requirement for an eventual third lower close doesn’t end the decline.
Crude Oil Mar Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Overnight weakness extended the 2-day pullback to probe under 64.25 support. The morning’s negative reaction to EIA was absorbed to at least pierce positive territory momentarily.
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Having fully fulfilled last week’s confirmed breakout, at least a pullback was likely. Wednesday’s open gapped down sharply and trended down intraday, testing 3.00-3.05.
Look ahead: Economic Calendar – for Thu Feb 1, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Two of Thursday’s pre-open reports offer glimpses into Friday’s payrolls report reaction. Three post-open reports (PMI, ISM, construction) offer another glimpse into economic health. Afternoon price action should become subdued ahead of the post-close annual earnings due from GOOGL, BABA, AMZN and AAPL.
Challenger Job-Cut Report
7:30 AM ET
Jobless Claims
8:30 AM ET
Productivity and Costs
8:30 AM ET
*PMI Manufacturing Index
9:45 AM ET
Bloomberg Consumer Comfort Index
9:45 AM ET
*ISM Mfg Index
10:00 AM ET
*Construction Spending
10:00 AM ET
EIA Natural Gas Report
10:30 AM ET
Fed Balance Sheet
4:30 PM ET
Money Supply
4:30 PM ET