Posts by Rod David
Afternoon Bias
| THU afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2727.25 | 2727.00 |
| …would target | 2732.00 | 2732.00 |
| Bias-down: under | 2721.25 | 2721.25 |
| …would target | 2716.00 | 2715.75 |
| Signal status: NO-BIAS | 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… Uninterrupted.
Pre-open rally extends through the open.
The overnight rally to 2716.00 had dipped 3 points to probe back under yesterday’s highs. That was its last similarity to yesterday’s pattern until the open’s surge. In the interim, dipping back to yesterday’s highs not only held, but also launched another upleg.
Greeting the open attacking 2720.00 reacted only momentarily before extending the rally to test its 2722.00 objective. Another 3-point reaction down confirmed the level’s relevance. But it was soon recovered on the way to attacking the 2727.00 target. The attack was slow-played, but extended momentarily to 2729.00.
1-minute RSI is refusing to become overbought again, and 3-minute RSI is now leaving overbought territory. Back under 2725.00 would start to signal the rally was being reversed. But back under 2722.00 through a relevant window would signal momentum reversing down.
The First Trade & Pre-open Tour Recording… Wash, rinse, repeat.
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’s rally extended overnight until piercing Friday’s 2698.25 pre-open high. Tuesday’s late 2696.00 high held a reaction down that suddenly resolved up at Wednesday’s open. Both bias-up parameters were exceeded to renew the bias-up signal, and the morning peaked at 2708.50. The noon hour’s breakout ultimately triggered the afternoon’s bias-up signal and peaked at its 2714.00 bias-up target. Reacting back down through the close touched the morning’s 2708.50 high. But closing above 2703.00 still put into play the next higher objective at 2722-2727.
Overnight action’s new info…
Other than starting a little later, extending the intraday rally to fresh highs has been identical to Tuesday night’s pattern. Both probed only slightly higher, neither formed a “new Globex trend extreme” yet requiring intraday retest, and both reacted back down down to touch the prior session’s high nearer to the open. one difference now forming is the dip back into yesterday’s range has been recovered back up to its origin, and now fresh highs are testing 2717.00 overnight high.
If, then…
Today’s version of the similar overnight pattern is starting to deviate further from yesterday’s. That difference might greet the open hovering at session highs, or might even develop into a surge. Regardless, a short-entry will be difficult prior to a post-open retest of overnight highs, and then its reversal. But a pre-open shallow dip would still be likelier to recover back to overnight highs. Entering the noon hour back under 2703.00 may be the only path still available to prevent extending to 2722-2727.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2714.00would be unlikely to trigger the 2715.00 bias-up signal at 10:15. Exiting the open above 2709.00 would be unlikely to trigger the 2706.00 bias-down signal.
Contrarian alert…
Stock market maxim: Rallies climb a “Wall of Worry”.
Stock market irony: Bricks are added back to the wall by touting metrics that say a rally has gone too far.
Contrarians know that everyone has already invested in a rally that everyone already believes in. Healthy rallies thrive on converting non-believers into buyers. So, rallies tend to peak along with the conversion of believers.
Of course, nothing is ever 100%. Peaks come well before “everyone” is a believer. For example, the AAII weekly sentiment survey indicates 52.6% of its respondents are
bullish, it’s highest level in 3 years. Bearish sentiment at 20.6% is its highest in 2 years.
None of which prevents optimism from rising further to new historical extremes. Eventually, belief in the rally exceeds the investment arena’s normal boundaries. Statistics permeate into the anecdotal. For example, this from one of the world’s highest-profile couples.
It reminds me of another “signal” ten years ago. Supermodel Gisele Bundchen felt pretty confident after years of watching the Dollar deteriorate. So she began demanding payment in Euros.
The chart locates where the EUR/USD was trading when Gisele decided its 4-year rally would continue. The chart also depicts the next 5-year decline. Complacency among professionals is one thing. Among non-professionals, it is alarming.
Anecdotes aren’t data, and neither of them are timing mechanisms. Who knows? Perhaps Kanye’s stock purchase is a publicity stunt to induce his and Kim’s fans to buy the same stocks, as they would any concert ticket, the shares being their ticket to shareholder meetings where Kanye and Kim may also be attending.
Anecdotes and data are barometers. The market’s temperature can continue rising in the near-term. New highs during January aren’t off the table, regardless of Friday’s late tumble. Although, my patterns neutralized their last “unfinished business above” last Thursday, so the new year could start by extending the tumble.
Our day is geared toward S&P intraday trades, but we’re keeping an eye on the trend’s health. Because, after all, we want you to have a Happy New Year in 2018!
—
Rod David
913 717-8598
IF, THEN… MARKET TIMING
Learn to think like an algorithm…
Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures, stocks or options on the same. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed herein. The past performance of any trading system or methodology is not necessarily indicative of future results. The information herein is being made available as a learning aid only and should not be used to invest real money. If you decide to invest real money, all trading decisions should be your own.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2715.75 | 2715.00 |
| …would target | 2722.50 | 2722.00 |
| Bias-down: under | 2706.50 | 2706.00 |
| …would target | 2700.50 | 2699.75 |
| Signal status: BIAS-UP, BIAS-UP TARGET EXCEEDED | 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.