Posts by Rod David
Market Wrap (recording & summary)
Has the market evolved beyond Pavlov? It keeps gapping up — to the same area, mind you — and then reversing down. Not every day, but most days this week, and most days of the past two weeks. Oh, and the reversals down never extend. They’ve been contained by a series of higher lows with only two exceptions, one being a headline reaction.
Perhaps Pavlov is alive and well… in the Dow. Not the proverbial Dogs of the Dow, far from it. The average has been rallying relentless and substantially during the same period. Although NDX has been flat-to-lower (more flat than lower), the Dow’s outperformance isn’t exactly rotation out of risk. It’s more like becoming the risky index.
Meanwhile, S&Ps are ranging flat-to-higher (more flat than higher) just under the high. Extending down should have happened by new if a new high were going to be avoided. Immediately breaking lower could extend but I would be suspicious. At least some fresh high is likely regardless of the eventual resolution.
Details and other markets coverage are discussed in the post-market Wrap recording here.
THERE IS NO SATURDAY REVIEW THIS WEEKEND.
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 Sep Contract (EC, ETF: (FXE, UUP))
Initially bouncing Friday stopped short again of fulfilling potential to 1.1945-1.1970 before reacting down aggressively. Closing lower Monday would not be capable of signaling a trend change, but a weak bounce Monday would be very vulnerable to signaling a trend change on Tuesday.
Gold Dec Contract (GC, ETF: (GLD))
Dropping back down to 1270.00 Thursday after bouncing from it Wednesday chipped away at the last support offered there. Friday plunged to test the next objective at 1271.00. Recovering 1272.00 would suggest a bigger bounce underway, but must recover 1285.00 to suggest something other than just more topping. Near-term attraction to gaps below indicate a bearish resolution regardless of the path there.
Silver Sep Contract (SI, ETF: (SLV))
Returning back down to 16.60 support already had indicated its eventual break, which was fulfilled by Friday’s plunge to 16.20. Immediate strength coming out of the weekend could be productive Monday morning, but still probably only temporary before at least retesting Friday’s lows.
30-year Treasury Sep Contract (US, ETF: (TLT))
Gapping up Friday extended higher momentarily, but long enough to attack the outstanding 155-16 target to within 6 ticks. Reacting down sharply filled the gap back down to Thursday’s close around 154-04 that has defined prior highs. There is no requirement to retest the high, or to fulfill the entire target, but it remains the likelier resolution.
Crude Oil Sep Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Ranging persisted Friday above the 48.25 sell signal, and under the 50.10 target that has been met already. Closing beyond either would be likely to extend in that direction.
Natural Gas Sep Contract (NG, ETF: (UNG, UNL))
Tuesday’s 2.76 low had required a retest. Thursday night’s drop pierced it, but Friday only attacked it repeatedly. The “ineffectual optimism” still suggests a fresh low is required, regardless of the ultimate resolution.
Look ahead: Economic Calendar – for Mon Aug 7, 2017
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: No high-profile or influential reports are scheduled Monday. But two Fed speakers bookend what is normally a less liquid noon hour.
Gallup US Consumer Spending Measure
8:30 AM ET
Labor Market Conditions Index
10:00 AM ET
3-Month Bill Auction
11:30 AM ET
6-Month Bill Auction
11:30 AM ET
*James Bullard Speaks
11:45 AM ET
TD Ameritrade IMX
12:30 PM ET
*Neel Kashkari Speaks
1:25 PM ET
Consumer Credit
3:00 PM ET
Afternoon Bias
| FRI afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2478.25 | 2475.75 |
| …would target | 2481.25 | 2480.75 |
| Bias-down: under | 2472.25 | 2469.75 |
| …would target | 2466.00 | 2463.50 |
| Signal status: NO-BIAS | FAQ | |
| 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… Their best effort yet.
Gap up extends, but still resolves down. Briefly.
So much optimistic sentiment ahead of so weighty an item as this morning’s payrolls suggests this is not a market that wants to stand still. Greeting the report more than 7 points off of overnight lows only bobbled briefly, but didn’t back off. Post-open action extended higher.
In fact, the 2477.75 post-open high probed the past week’s worth of prior highs. But only briefly. The setup was essentially 1 tick away from signaling a very bullish morning ahead. But back under 2475.75 would indicate otherwise. No particular downside pattern was likely under 2475.75. And there wasn’t much of one. Only a straight line to 2469.25.
But, wait. There’s more. The plunge to 2469.25 wasn’t required to resolve with any particular characteristics. But it has been a straight line, too. Up, testing the 2474.50 bias-up signal at 10:30.
It’s too late to invalidate the no-bias signal that already put into play an offsetting test of the 2466.25 bias-down signal. But this reaction up was the best possible effort. Unless extended higher anyway, this bounce is vulnerable (if not also likely) to producing a second post-oipen drop — something missing from the past couple of weeks.