Posts by Rod David
Market Wrap (recording & summary)
Words could only describe so much. But this picture of S&P futures since Wednesday afternoon’s low shows 
what the weekend’s impending illiquidity can do, and what it can prevent.
Reacting down from the overnight rally was entirely legitimate. That is an irrelevant timing window, so it can’t gain traction. And it greeted the open at the 2688.25 bias-up signal’s resistance. More so, the overnight rally was an extension of Wednesday’s late surge. It was only noise, having peaked at resistance of the afternoon bias environment’s high.
An entirely legitimate and fully expected reversal down. Pretty productive, too, putting into play an offsetting test of the 2681.50 bias-down signal. (Add it to 2679.00 and 2675.50 outstanding.)
But the drop stopped suddenly, and permanently for the day. Weekend illiquidity inhibits sponsorship, and promotes noise. Gapping up Friday above prior highs would be credible for extending higher into year-end — the same setup as every other day this week. Meanwhile, there briefly visiting the lower objectives is likelier, while being vulnerable to extending down even deeper.
As long as we’re sharing pictures, here’s another. We professionals consider the historical metrics that the rally has gone too far, which ironically adds bricks to the proverbial “Wall of Worry” keeping the rally alive. But, what do we know. Here’s an example of how popular the stock market rally has become among those whose ignorance is blissful:
The last time I recall seeing a non-analyst’s widely publicized opinion is 10 years ago:
I’ve noted on the following long-term EUR / USD chart where Gisele proclaimed that paying her millions of dollars would offend her:
That’s timing which many market analysts only wish they could match. And I’m not saying Kanye has Gisele’s expertise. But it’s too cold to measure miniskirts, so we’ll have to wonder whether the stock market’s chart will have taken a similar turn in several months.
- 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))
Wednesday’s break above the 1.1965 buy signal extended higher to 1.2015. The next higher target at 1.2060-1.2075 remains in-play.
Gold Feb Contract (GC, ETF: (GLD))
Exceeding the 1293.50 target Wednesday had put into play the next higher objective at 1298.00, which was attacked by Thursday’s intraday rally to within 70 cents. An immediate reaction down from four consecutive uptrending sessions would be likely to recover.
Silver Mar Contract (SI, ETF: (SLV))
Trending up relentlessly for a fourth consecutive session on Thursday nearly fulfilled the 16.90 target that was put into play by having exceeded the 16.85 target Wednesday.
30-year Treasury Mar Contract (US, ETF: (TLT))
Wednesday’s surge to 153-04 didn’t extend higher Thursday. But its reaction down was relatively shallow, and ultimately ranged around 152-22 instead of breaking lower under it. A fresh high Friday would still be bullish.
Crude Oil Feb Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Wednesday already failed to confirm Tuesday’s explosion higher, and now Thursday has ranged even more narrowly than did Wednesday. But neither rejected Tuesday’s surge, maintaining the upside momentum next targeting 61.10.
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
Thursday’s open had already gapped up above the 2.72 buy signal to 2.86. Extending higher in reaction to the EIA report tested 2.94. A second consecutive higher close Friday — preferably above 2.98 — would confirm a new upleg is underway.
Mid-day Update… Down, for the count?
Ranging narrowly at the morning’s low.
The open’s slide down to 2683.25 hasn’t extended. Not through the balance of the morning bias environment, or the noon hour, or this far into the afternoon bias environment.
But neither has the decline recovered, or even bounced meaningfully. Ranging about 1 point either way around the 2684.25 bounce limit has left the decline intact. And this morning’s offsetting test of its 2681.50 bias-down signal remains in-play.
This morning’s drop bottomed too far above yesterday’s low — also 2681.50 — to be considered optimism. But the narrow ranging is ineffectual, so bearishness from a contrarian perspective is credible.
Back above 2687.00 would start to signal momentum reversing up. But potential to fulfill unfinished business below continues to be likelier.
Look ahead: Economic Calendar – for Fri Dec 29, 2017
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: The last trading day of the year, and no econ reports are scheduled. Trading ends normally, and like last weekend, resumes on Monday. Volume is likely to taper off, and we’ll try to hold the Market Wrap early.
Baker-Hughes Rig Count
1:00 PM ET
Afternoon Bias
| THU afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2687.50 | 2688.00 |
| …would target | 2682.00 | 2692.50 |
| Bias-down: under | 2681.75 | 2682.25 |
| …would target | 2676.25 | 2676.75 |
| 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.