Posts by Rod David
The First Trade & Pre-open Tour Recording… What could have been.
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 could have exploited a bullish setup that had been created Monday. Monday’s selling pressure kept the session exclusively in negative territory, while holding above 2563.75 key support nevertheless confirmed the next higher objective at 2590.50 is in-play. But gapping up only found sellers again — although the overnight rally had created room to absorb the selling without damaging the rally’s chart. Dipping into Monday afternoon’s range down to 2569.00 remained in positive territory and never gained traction. Hovering at session highs through the afternoon bias environment would be likely to rally through the final hour. But fresh highs only touched 2575.50 before tragedy in New York triggered a reaction back down to 2571.00.
Overnight action’s new info…
A surge soon probed above Tuesday’s highs up to 2577.00. Narrow ranging there started ticking higher ahead of Europe’s opens, and then surged again to touch Friday’s 2580.75 high. Now a brief consolidation is resolving up to new at 2584.00.
If, then…
Last night’s rally suggests yesterday afternoon’s tragedy did derail its late rally setup. Is that necessarily bullish for this morning? Perhaps in compensating for its delay, the overnight rally has gotten ahead of itself. We know three things that make this morning vulnerable to dipping: First, greeting the open with one-way, relentless overnight trending is vulnerable to attracting counter-trend sponsorship. Second, this week already has two consecutive opening dips, which is a pattern. And third, last night’s consolidations were either shallow or brief, both characteristics of impatience. Also relevant is the timing of this afternoon’s FOMC announcement, which could inhibit much more buying before then. Also that gapping up helps to prevent a morning dip from not damaging the rally’s chart. And that reversing down from a gap up above all prior highs would require an eventual retest, which is a tactic rallies employ to conserve and refuel buying pressure. So, NOT trending back down through the open would be likely to extend this morning, but not necessarily, and at least establish an anchor that helps to recover.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2583.50 would be likely also to exceed the 2581.50 bias-up signal at 10:15 to renew the bias-up signal. Exiting the open above 2577.75 would be likely at least to trigger the 2576.00 bias-up signal.
Phonetic dictation…
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Morning Bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2578.75 | 2576.00 |
| …would target | 2584.25 | 2581.50 |
| Bias-down: under | 2571.25 | 2568.50 |
| …would target | 2565.50 | 2562.75 |
| Signal status: BIAS-UP, BIAS-UP TARGET MET | FAQ | |
| 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.
Market Wrap (recording & summary)
Tuesday’s gap up didn’t immunize the session from being able to probe Monday afternoon’s range to fresh lows. But gapping up did enable more room to expend selling pressure without it damaging the recovery’s chart.
Recovering from the open’s selling pressure defined the morning’s high, and then also the noon hour and afternoon bias environment’s highs. The final hour arrived with an attempt to break higher, but it only got to 2575.50. Tragedy on a bike path in New York may have been responsible for reacting back down into the range to 2571.00.
Wednesday’s opening setup remains unchanged from Tuesday. Gapping up would likely extend higher intraday, its objective being a retest of Friday’s high. Reacting down from a gap up would be at risk of extending down into Monday afternoon’s range, and and through it to test 2560.00.
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 Dec Contract (EC, ETF: (FXE, UUP))
Firming slightly further Tuesday morning filled the gap back up to Thursday’s 1.1685 close. There’s still room up to 1.1735 or 1.1760, but the decline remains likely to resume.
Gold Dec Contract (GC, ETF: (GLD))
Attacking bounce’s the 1280.50 objective Monday reversed down Tuesday morning to attack the original 1266.50 pullback limit. Holding its test would maintain potential for bottoming without first probing new lows. The open’s gap down does suggest that sellers are weak-handed.
Silver Dec Contract (SI, ETF: (SLV))
Hovering at Monday’s highs into Tuesday’s open was soon reversed down to attack the pullback’s original 16.60 low, presumably on the way to fulfilling the 16.50 target below.
30-year Treasury Dec Contract (US, ETF: (TLT))
Firming further overnight almost touched the 152-20 bounce limit that encompasses the “higher prior lows” tests and allows the downside momentum to remain intact.
Crude Oil Dec Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Monday’s test of the 54.15 objective was maintained overnight above the 53.88 pullback limit for the next higher objective at 55.70 to remain intact. Tuesday extended to fresh highs above 54.50, greeting the post-close API and Wednesday’s EIA reports from a position of strength.
Natural Gas Nov Contract (NG, ETF: (UNG, UNL))
Avoiding a fresh low on Monday only made the inevitable likely to be more substantial or durable. Gapping down Tuesday under Monday’s low extended to fresh lows at 2.88.
Mid-day Update… Held back, but holding up.
Still fluctuating around the open.
This morning’s likelier scenario was to fluctuate sideways, essentially within yesterday afternoon’s 2567.00-2571.00 range. The gap up’s reversal back into yesterday afternoon’s range had crept lower to gain traction that made its recovery unlikely.
Ultimately, the post-open dip was retraced back up to this morning’s 2574.25 bias-up signal. No higher, as a recovery this morning had become unlikely. But the dip into yesterday afternoon’s range was recovered, so the sideways ranging has developed around the 2573.00 opening print.
The afternoon’s bias environment has triggered no-bias. Meanwhile, buying pressure isn’t being expended, but is it being conserved for use when the bias environment lapses? Still hovering at session highs into the bias environment exit would be vulnerable to rallying through the close. Otherwise. breaking back under 2571.50 would open the door back into yesterday afternoon’s range and lower.