Posts by Rod David
The First Trade & Pre-open Tour Recording… Suddenly excited about payrolls.
Proper context can start the day with a solid win and make all the difference.
NEW DAILY SCHEDULE
Bandwidth issues prevented the recording of today’s Market Tour.
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A
Through the prior close…
Thursday’s relatively 2468-2472 narrow range was interrupted by the Grand Jury headline. The plunge it triggered fulfilled the expected 2466.50 objective, albeit in an unexpected way. But its support then triggered a recovery into the close. Perhaps it was anxiousness ahead of Friday morning’s Employment Situation report, paralyzing price action the prior afternoon. But it is eerie that the recent spate of gaps up and/or post-open slides didn’t repeat either characteristic.
Overnight action’s new info…
Friday is already promising to be more interesting. Since initially retracing some of yesterday’s recovery back to 2468.00, the balance of the Globex session has trended higher. Gradually, but relentlessly, now probing yesterday’s high up to 2475.50. The payrolls report’s inhibiting influence seems suspect, or done.
If, then…
Another gap up and reversal down? Yesterday’s dullness not withstanding, falling right back into that pattern seems mundane for an interesting market. It’s also a lot of sentiment to express just ahead of something so weighty as the Employment Situation report. So, the question we may be faced with is whether the pre-open reaction down can persist through the morning, or if it corrected this overnight rally to allow its resumption. Regardless, this being a Friday, the morning’s bias often persists through the afternoon.
First Trade…
Preliminary levels aren’t evaluated before an Employment Situation report.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2477.25 | 2474.50 |
| …would target | 2482.75 | 2480.00 |
| Bias-down: under | 2468.75 | 2466.25 |
| …would target | 2463.25 | 2459.50 |
| Signal status: NO-BIAS, TESTED BIAS-UP SIGNAL | 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)
What is responsible for Thursday’s relatively narrow range? That is, until the headline triggered a plunge to the longstanding 2466.50 objective. Anxiousness ahead of Friday morning’s Employment Situation report? While price action can become paralyzed ahead of the report, that doesn’t explain Thursday morning. Regardless, the session fluctuated in a narrowing range that couldn’t start trending either way.
Three prior sessions had reversed down from gapping up, so perhaps the problem was no overnight effort. But the Globex low did touch the bias-down signal, which held. Six of the prior seven sessions had done the same, more than enough conditioning for Pavlovian salivating that accelerates the usual move into an earlier window. Wednesday night’s dip hardly qualifies.
An important point to charting is spotting patterns. An equally important point is spotting deceptive patterns. The latter is easier, because valid patterns often resolve as quickly as they form. False patterns make sure that everyone is convinced. So, while the past week seems to have formed an Ascending Triangle, that was complete well before now.
Breaking higher Friday would be possible, but suspicious. Breaking lower would be likelier, even if also only so far for the day.
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 Sep Contract (EC, ETF: (FXE, UUP))
Shallow overnight lows held “lower prior highs” at 1.1860 before firming into Thursday morning, still having room up to 1.1945-1.1970.
Gold Dec Contract (GC, ETF: (GLD))
Launching the gap fill back to Tuesday’s close from testing 1271.00 support had indicated the gap’s test would react down to 1261.00-1262.00. The 1269.70 gap’s test reacted down Wednesday night to 1263.00, bouncing back above 1271.00, short of its lower objective, which is still in-play.
Silver Sep Contract (SI, ETF: (SLV))
Wednesday’s gap down to 16.45 had recovered to fill the gap back up to Tuesday’s 16.78 close. But simply launching the gap fill from 16.60 had indicated the gap would hold. Its reaction down overnight retested 16.45 but bounced back above 16.60 through the morning.
30-year Treasury Sep Contract (US, ETF: (TLT))
Gapping up didn’t extend higher Thursday, but that sufficed to fulfill the confirmed breakout’s requirement for at least one more higher close. More is likely to come, since the session held at or under the prior high, likely at least to probe higher.
Crude Oil Sep Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Firming Thursday morning back toward 50.10 has no requirement to resolve in either direction, and the trend remains up with higher highs and higher lows. But not closing above 50.10 keeps alive potential to close under 48.25 and launch a new downleg.
Natural Gas Sep Contract (NG, ETF: (UNG, UNL))
Thursday’s EIA report wasn’t being greeted from a position of strength, regardless of having firmed into it. Its reaction dipped back down into the range, still likely to retest the low even in the most bullish scenario.
Mid-day Update… Shaking them loose.
Still trying to bring sellers out of the woodwork.
The open’s 5-point dip attacked 2468.00 before RSIs diverged positively. Its reaction retraced the opening dip at the bias environment’s high. Then the retracement was retraced at the noon hour’s low.
Back-and-forth, barely attacking positive territory. The market is trying to attract sellers to drive price down, probably where buyers are more willing to sponsor a bigger rally.
If that’s the goal, then a shallow dip won’t suffice. And so far, the technique has produced only a shallow dip, momentarily piercing 2468.00. It found obligatory support at the 2467.75 overnight low. There’s still potential to 2466.50, while back above 2472.00 would signal a probe above yesterday’s highs already underway.