Posts by Rod David
Afternoon Bias
| WED afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2833.50 | 2834.25 |
| …would target | 2840.25 | 2841.00 |
| Bias-down: under | 2823.75 | 2824.50 |
| …would target | 2817.50 | 2818.25 |
| Signal status: NO-BIAS | 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… Miniature inverse of yesterday.
Gap up and range choppily sideways.
Yesterday’s open had gapped open sharply lower. The first half-hour ranged widely. And each of the session’s leg’s choppily overlapped the open. 
This morning’s action is similar. Gapping open (less) sharply higher and ranging (less) widely has only ranged choppily sideways around the opening print.
This is in-line with my warning this morning that trending would be difficult — both because of yesterday’s wide range, and because of this afternoon’s impending news. So, the open’s surge barely pierced the overnight high up to 2839.75 before reversing down to 2830.50.
Now retracing the bounce is probing fresh post-open lows down to 2827.75. The range persists.
Meanwhile, these are large legs because there is a lot of room within yesterday’s opening range of support and resistance. Neither end of any range requires being retested, but moves away from its midpoint are likely to return.
Spoiler Alert: Often when greeting FOMC events in a persistent range, the volatile reaction to its news tends to be contained within the range. But breaking lower would be attracted down to the gap back to yesterday’s 2824.00 area close. And fresh session highs would likely test 2845-2847.
The First Trade & Pre-open Tour Recording… First impressions last.
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…
Tuesday started pessimistically, but didn’t get worse. It may have looked or felt that way since the range is so wide. Gapping down sharply 22 points to 2832.00 immediately probed another 3 points lower. A quick 10-point bounce reacted down 20 points as quickly to 2818.50. All during the first half-hour. The balance of the session ranged choppily sideways, narrowing through the day and closing around 2824.00.
Overnight action’s new info…
Wide, choppy gyrations that characterized intraday action has also defined last night’s ranging. More so, the choppiness expanded instead of contracting, and it has been flat-to-higher. Firming 6 points into the State of the Union speech ultimately surged 6 points afterward to 2835.50. Collapsing 10 points reversed up almost 12 points. And still, yesterday morning’s 2837.00-2839.50 highs have barely been attacked. The last dip to 2828.50 has reacted up to attack 2835.00, about 11 points above yesterday’s close.
If, then…
For all of yesterday’s persistent pessimism, and for all of the overnight choppiness, yesterday’s opening range still stands. Neither end has been touched since then. None of which prevents trending, but it limits the window for starting it. And anything which is limited is implicitly less likely. Having said that, yesterday’s wide opening range does allow reactions within it to be as satisfying as a usual trending leg. Yesterday morning’s highs could be probed into the “empty” space of its gap down (in the Market Tour, I show how to identify the resistance that’s in it). But while this afternoon’s FOMC policy statement is impending, a resolution will likely be inhibited.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2838.50 would likely also exceed the 2837.25 bias-up target at 10:15 to renew the bias-up signal, next targeting 2845.00. Exiting the open above 2831.75 would be likely at least to trigger the 2830.00 bias-up signal at 10:15.
Morning Bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2829.25 | 2830.00 |
| …would target | 2836.50 | 2837.25 |
| Bias-down: under | 2819.75 | 2820.50 |
| …would target | 2813.25 | 2814.00 |
| Signal status: BIAS-UP, BIAS-UP 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 (recording & summary)
Monday’s opening sell signal hadn’t finished its business that morning, making it likely to extend into Tuesday morning. Which it did, trending down early overnight and extending lower before the open. Tuesday morning’s low did react up substantially, but mostly only temporarily. The balance of the session ranged choppily sideways through the close, just above the morning’s lows.
A couple of things happened Tuesday, and a couple didn’t.
What did happen is a new sentiment or pattern of gapping up into Friday’s new high session and gapping down into Tuesday’s retracement through that last upleg’s origin. The paradigm shift is sudden and relevant, closing under support — similar to January’s two prior big down days. But what didn’t happen Tuesday is the broken support being within proximity of Wednesday gapping up immediately above it to reject Tuesday’s break. but too far below to be recovered immediately by a gap up tomorrow.
Tuesday’s other development was the multiple downtrending sessions, also a new characteristic. This didn’t happen during January’s rally, which has stretched the rubber band. That rubber band didn’t snap back up in the afternoon, perhaps inhibited by a stream of high-profile post-close earnings due, and/or the evening’s State of the Union address, if not also the next morning’s ADP employment number.
Isolating fresh lows to the overnight is the only reliable recovery pattern that would be signaled immediately. Meanwhile, overnight lower lows not recovered through the open would be vulnerable to melting down into the afternoon.
- Details and other markets coverage are discussed in the post-market Wrap recording here.
- Monitor overnight Globex trading in the chaRTroom here.