Posts by Rod David
Market Wrap (recording & summary)
MARKET WRAP WAS HELD EARLY AT 2:22 ET FRIDAY.
THIS SUMMARY IS BASED ON PRICE ACTION THROUGH 3:30.
Friday Factors exploited the morning’s inability to exploit the delayed improvement upon the open’s gap up. Friday morning biases tend to persist through the noon hour, further inhibiting sellers. And greeting the afternoon bias environment all but fulfilling its target also fulfilled its buying pressure. Yet another opportunity sellers failed to exploit.
The rest of the session was governed by the greatest Friday Factor of them all. Trending sessions that exit the afternoon bias environment above all prior timing window highs rarely reverse down. And the greatest corollary of them all, that the setup is very vulnerable to extending the session’s trend.
We’re left with a new trend extreme close requiring at least an eventual follow-up higher close. It’s a blow-off rally, and Friday Factors probably also prevented rejecting early strength early, so another downdraft first is possible Monday morning. But any downdraft at this stage, however deep or protracted, is likely to be recovered.
- Details and other markets coverage are discussed in the post-market Wrap recording here.
- REMINDER: NO SATURDAY REVIEW THIS WEEKEND… ENJOY!
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))
Another well-timed remark from Mnuchin triggered a surge that mostly retraced Thursday’s drop. Thursday’s drop had retraced the morning’s surge. Has the administration talked currencies into forming Head & Shoulders tops? Back under 1.2390 would trigger the reversal.
Gold Feb Contract (GC, ETF: (GLD))
Plunging after Thursday’s close tested the rally’s 1345.00 pullback limit. Having attacked the 1369.50 target only hours earlier, there’s potential for the reversal to extend. But Friday morning held. But the target otherwise remains intact so long as the pullback limit holds through the close.
Silver Mar Contract (SI, ETF: (SLV))
Attacking the 17.72 target to within 1 penny certainly made it easier for Thursday’s post-close plunge that tested both recent 17.30 and 17.11 buy signals as support. But holding 17.30 through the close, at least through Friday morning, keeps alive the potential for recovering the drop’s origin and more thoroughly testing the high.
30-year Treasury Mar Contract (US, ETF: (TLT))
Thursday’s bounce didn’t extend overnight, and Friday morning retraced the recovery attempt further, still likely to produce lower lows so long as 149-10 isn’t recovered.
Crude Oil Mar Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
The reaction down from having gapped up to test 66.05 resistance was retraced to 65.37 “lower prior highs” Thursday. Its reaction was recovered Friday to retest 66.05 and possibly also extend the rally to its 67.15 target.
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
Greeting Friday with more aimless choppiness, albeit shallow, remained intact through the morning. A confirmed breakout still requires an eventual third higher close, but its immediate isolated overnight follow-through allows a pullback will develop first. Friday afternoon did probe fresh highs, and new high close on Friday often extends at least temporarily Monday.
Mid-day Update… Better late than never.
Belated breaks bringing buyers.
The open’s gap up didn’t extend, but it was maintained. That wasn’t decisive enough to confirm extending, but sellers weren’t exploiting it. Fresh highs after the opening 15 minutes of volatility were too late to confirm extending, too. 
Sellers did exploit that, with a very last-minute 4-point spike down to probe the 2849.00 bias-up target and avoid renewing the bias-up signal. But it was still a bias-up environment, and the rally resumed.
Extending the open’s gap up, and/or renewing the bias-up signal would have targeted new highs. A new high followed anyway at the morning’s 2856.50 peak. Barely a new high, no less grudging than the delayed buying spurts preceding it.
But sellers still haven’t retaken control as this afternoon’s 2861.25 bias-up target is met one minute after entering the bias environment. And now it’s being probed by at least 1 point after an interim dip to its pullback limit.
Among my Friday Factors setups is the afternoon bias environment exit on a trending session. Exiting at fresh session highs is incredibly difficult to reverse down — not required to extend, but vulnerable to it anyway. Exiting the bias environment under a prior low or relevant level like 2857.75 would be vulnerable to dropping through the close.
Look ahead: Economic Calendar – for Mon Jan 29, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: The week ahead contains a FOMC policy statement and Employment Situation report. But Monday lacks that excitement, with couple of lower-profile econ reports start the week, neither one having a track record for influencing price action.
Personal Income and Outlays
8:30 AM ET
Dallas Fed Mfg Survey
10:30 AM ET
3-Month Bill Auction
11:30 AM ET
6-Month Bill Auction
11:30 AM ET
Afternoon Bias
| FRI afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2856.75 | 2857.25 |
| …would target | 2860.75 | 2861.25 |
| Bias-down: under | 2849.25 | 2849.75 |
| …would target | 2843.25 | 2843.75 |
| Signal status: BIAS-UP | 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.