Posts by Rod David
The First Trade & Pre-open Tour Recording… Keeping optimism in check.
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…
A pullback triggered by the government shutdown was likely. The pullback was likely to be shallow, but unlikely to recover quickly. Sort of like the shutdown itself. Sunday night’s 8-point gap down to 2803.75 affirmed the expectation, as did the reaction down from a pre-open surge. I’m not sure whether the absence of rhetoric should have meant a political deal was close, but the market was clearly relieved — a deal was reached Monday morning while the market rallied to new highs. The morning’s bias-up target was probed up to 2822.50 during the open. The afternoon’s bias-up target was probed up to 2828.00 during the noon hour. The last half-hour surged most steeply to 2835.00 and 2836.50 into and out of the cash session close.
Overnight action’s new info…
Initially retesting the cash session close back down to 2834.00 was held, and the range had begun trending higher by midnight. A blip-up to 2842.00 into Europe’s opens wasn’t extended, but its move was complex to form a “new Globex trend extreme” requiring eventual intraday retest. A relatively narrow consolidation started slipping a couple of points, and now has collapsed into negative territory testing 2829.00. The first reaction up is already testing the earlier 2834.00 overnight low as resistance.
If, then…
To the degree that Friday’s very late probe higher can be considered a breakout, then Monday’s higher close could be considered its confirmation — but Fri/Mon breakout confirmations aren’t reliable. If the chart were inverted to form a plunging correction, then I would expect the friction of ground already covered previously to produce a reversal soon. Fresh territory like most of Monday’s range still has the friction of calculable resistance, but it’s more vulnerable to bigger capitulation. Now that the overnight probe has left a path of crumbs to find its way back up, then dipped back into negative territory, retesting the previously covered ground above can offer a more predictable friction. Probing the highs — perhaps up to 2848.00 — after gapping down would form the basis for a bearish Pivot Reversal if reversed into the close. Rallying this morning will be difficult if the earlier overnight low isn’t already recovered through the open, since yesterday’s high has been probed overnight. But a a deeper pullback this morning has a lot of room below to expend selling pressure before breaking any relevant levels that would damage the uptrend. The burden of proof is still on sellers.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2833.000 would be unlikely to trigger the 2831.75 bias-down signal at 10:15. Exiting the open under 2830.00 would be likely to trigger bias-down.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2837.50 | 2839.25 |
| …would target | 2844.75 | 2846.75 |
| Bias-down: under | 2829.75 | 2831.75 |
| …would target | 2824.00 | 2825.75 |
| Signal status: NO-BIAS, BIAS-UP SIGNAL TESTED | 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)
Both of Monday’s bias windows triggered bias-up while also having fulfilled their targets. Both essentially held their tests as resistance for the duration of their bias environments.
The morning’s bias-up target was met during a 13-point upleg through the open. It resolved higher at noon, in reaction to headlines announcing the Senate’s agreement that added 8 points into the noon hour’s high. Its its peak was a test of the afternoon’s bias-up target, which held until the last half-hour.
Then came another 8-point upleg, the session’s most impressive. It was no more productive than the noon hour’s rally, and less so than the open’s rally. But its slope was steeper. Steeper into the close of a trending session, which is very aggressive action no matter how productive.
The new trend high close mandated by Friday’s close is now fulfilled. To the degree that Friday’s very late probe higher can be considered a breakout, then Monday’s higher close can be considered its confirmation — but Fri/Mon breakout confirmations aren’t reliable.
If the chart were inverted to form a plunging correction, then I would expect a reliable reversal soon. Either already underway overnight, or after the open fails to maintain a probe higher. This is not a correction, and the next higher objective is 2848.00, so the burden of proof is surely on sellers.
- Details and other markets coverage are discussed in the post-market Wrap recording here.
- 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))
A third consecutive session Monday of ranging narrowly between last Tuesday’s 1.2315 close above and Wednesday’s 1.2260 gap down, all above the 1.2210 sell signal. The delay in extending down suggests at least a probe of fresh highs is likely.
Gold Feb Contract (GC, ETF: (GLD))
Monday’s flat-to-lower ranging actually began firmer overnight. Regardless, the session’s drift into negative territory doesn’t yet invalidate the rally effort above 1336.00.
Silver Mar Contract (SI, ETF: (SLV))
Firming overnight entered Monday ranging flat-to-lower, dipping from last week’s attack on the 17.11 buy signal to threaten the 16.95 sell signal that has also been thoroughly tested and is less likely to hold another.
30-year Treasury Mar Contract (US, ETF: (TLT))
Fresh lows Sunday night were recovered by Monday’s open, but the morning only ranged narrowly sideways, holding a test of the 149-10 bounce limit to keep alive the downleg.
Crude Oil Mar Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
[Rolling coverage forward to MAR, which trades at a nickel discount from FEB]… Still holding the 63.10 pullback limit at Monday’s open, a brief surge attacked the 64.20 buy signal before collapsing back down to 63.10 support. Its break would target 61.60.
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
Gapping up to 3.25 Sunday night and probing slightly higher was retraced into Monday’s open and fluctuated choppily sideways into the afternoon. Closing above 3.25 would still be credible for resuming the rally.
Mid-day Update… Last licks.
Another bias-up target met and held.
This morning’s 2822.50 high fulfilled the 2819.50 bias-up target. It eventually corrected down to 2817.25 as the bias environment was lapsing. Already recovering into noon was vulnerable to a series of headlines that began claiming a deal was reached to re-open government. The noon hour surged to 2800.00.
The next reaction down touched 2824.50. Bouncing back to this afternoon’s 2827.25 bias-up target held it instead of renewing the bias-up signal. Will it extend higher like this morning?
Probably not. Probably not, because usually not. Usually, holding a test of the afternoon bias target through the 1:20 bias timing window will define the bias environment’s upper-end. Usually, the bias environment will back-and-fill, sometimes even trending down. Usually, hovering at the target can exit the bias environment in another upleg.
None of which suggests being short into fresh highs during the bias environment. Rather than be premature, new highs could get further squeezed. Having said that, this last upleg does seem to be the product of only the headlines, and its buying pressure is met. Back under 2823.75 would start to signal momentum reversing down.