Posts by Rod David
Mid-day Update… Last bite at this apple.
Trying to reject bias-down.
This morning’s recovery from 2818.50 made it to 2837.00 before the bias environment began lapsing. The recovery was retraced down to 2820.50, triggering the afternoon’s bias-down. But the afternoon’s behavior doesn’t seem to know it — A 12-point bounce is testing 2832.00.
The bounce may be only a correction. Of course, this is a very bearish chart point to be expending weak-handed buying pressure. Stretching the rubber band could snap back down very hard this afternoon, to 2805.00 and 2893.00.
This afternoon’s 2819.00 bias-down target is now “unfinished business below.” It can remain outstanding while the bounce extends into a rally. But back under 2824.50 would start to signal the rubber band is snapping back down.
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))
1.2475 resistance was probed into through Tuesday’s open and held a test of Friday’s high before reversing back down to unchanged. Just closing back under Friday’s range indicates the bounce was weak-handed, still needing confirmation of following through to the downside.
Gold Apr Contract (GC, ETF: (GLD))
[Rolling coverage forward to Apr, which trades at about a $5 premium to Feb]… Bouncing Tuesday tested the 1350.50 bounce limit which reacted down to probe under Monday’s low and to retest the 1340.00 area “lower prior highs” whose test on Monday had triggered the interim bounce. Sellers gained no traction for their effort.
Silver Mar Contract (SI, ETF: (SLV))
Gapping up Tuesday probed higher only briefly before its test of 17.30 resistance had pushed back down to retest Monday’s low. The gap back down to Monday’s close is filled, which doesn’t equate to being a buy signal, but would be constructive to another rally attempt succeeding.
30-year Treasury Mar Contract (US, ETF: (TLT))
Tuesday’s open didn’t gap down as Monday’s “ineffectually optimistic” pattern usually resolves, but the trend remained down as fresh lows were probed into the afternoon. Wednesday’s FOMC policy statement is being greeted from a position of weakness.
Crude Oil Mar Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Monday’s bounce off of 64.95 support was recovered only back above last Thu-Fri low, but did not reverse momentum up. Dipping into Tuesday’s open extended down to test critical support at 64.20. Back above 64.95 would resume the rally.
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Gapping up and ranging sideways throughout Tuesday still produced a higher close, which fulfills the minimum requirement for last week’s confirmed breakout. Meanwhile, the session may have formed an Island, a pattern that can reverse down but only temporarily.
Look ahead: Economic Calendar – for Wed Jan 31, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Tuesday night’s State of the Union address may contain spending plans and saber-rattling that influence overnight price action. But Wednesday’s price action should be more influenced by the pre-open ADP numbers that help to fine-tune our expectations for Friday’s payrolls reaction. Also, any obvious reaction to pre-open reports is likely to be repeated by post-open reports. And the PMI has a reliable track record for influencing price action — both its private institutional release and subsequent public release. Volatility could contract considerably while awaiting the afternoon’s FOMC policy statement, which is very reliable for influencing price action through the close. That duration of influence will abut an otherwise normal consolidation ahead of high-profile (but otherwise not influential) post-close earnings coming from T, BA, MSFT and FB.
MBA Mortgage Applications
7:00 AM ET
*ADP Employment Report
8:15 AM ET
Employment Cost Index
8:30 AM ET
Treasury Refunding Announcement
8:30 AM ET
*Chicago PMI
9:45 AM ET
Pending Home Sales Index
10:00 AM ET
EIA Petroleum Status Report
10:30 AM ET
*FOMC Meeting Announcement
2:00 PM ET
Afternoon Bias
| TUE afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2840.25 | 2841.00 |
| …would target | 2845.75 | 2846.50 |
| Bias-down: under | 2824.75 | 2825.50 |
| …would target | 2818.25 | 2819.00 |
| Signal status: BIAS-DOWN | FAQ | |
| NEW! Flowcharts: Bias-UP // Bias-DN INTRO VIDEOS #1 and #2 |
||
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… Uncle.
Has the follow-through finished?
Selling resumed before the open and retested the 2831.00 overnight low down to 2828.75. Bouncing through the open overlapped 2837.50 resistance by a couple of points 
before reversing back under its 2836.50 sell signal. The drop soon accelerated into the setup’s 2827.75 target.
And soon broken. By a lot. Sawing through 2827.75 formed a Falling Wedge that resolved down aggressively again, plunging to 2818.50.
That was potentially stage-3 of a 6-stage pattern that often follows (see the nearby chart). Troughing and bouncing back into the Wedge have taken the pattern to its final stage. The bounce extended back above the Wedge before pausing, increasing the potential for its reversal to gain traction throughout the day.
A scapegoat has been identified in the pre-open news of a Buffet/Bezos/Dimon health care initiative that is pressuring the rest of the sector downward. This helps market participants to discount the negative and to start re-focusing on the positive. Not immediately, but gradually and ultimately.
Back under 2827.00 (just tested by a blip-down) would start to signal the recovery is failing. And potentially that a much more substantial intraday drop is forming. Otherwise, could today’s session turn positive? That’s the stuff of blow-off tops, even after their first warning shot is fired. Back above 2831.75 (now being probed) would help to extend the bounce, or more.