Posts by Rod David
Market Wrap (recording & summary)
Buyers gained traction for their efforts Wednesday. Exiting the afternoon bias environment above the noon hour’s high and then entering the final hour even higher is combined to signal that Thursday morning will trend higher. With two caveats. The signal could have been invalidated by trending back down through the 3:10-3:20 proxy window. Thursday’s open could be greeted by a reversal signal like gapping down under the afternoon’s 2466.00 low (which would also form a “session-long decline” setup).
The first exception didn’t happen, but the second setup might. Wednesday morning’s post-open slide was the third consecutive. Pavlovian conditioning would suggest the market is anticipating a fourth post-open slide on Thursday. That makes the prior timing windows vulnerable to sliding. It didn’t happen late Wednesday, leaving it to the overnight.
Avoiding an overnight drop would be likelier to absorb a morning dip, at least retracing it to unchanged if not also reversing it to an afternoon rally. Gapping up isn’t necessary to rallying tomorrow, but it’s the likeliest defense against the overnight downside risk.
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))
At least probing fresh highs remained likely, if not actually a new high close. Overinght strength was retraced before Wednesday’s open, but then probed through the morning to attack the 1.1945-1.1970 objective.
Gold Dec Contract (GC, ETF: (GLD))
Overnight weakness extended into Wednesday’s open and tested the 1271.00 support before reacting up to nearly fill the gap back at Tuesday’s 1279.60 close. Just having touched 1271.00 suggests the gap fill will hold, and that a new reaction down will test 1261.00 and lower.
Silver Sep Contract (SI, ETF: (SLV))
Dipping overnight and into Wednesday’s open tested the 16.60 pullback limit down to 16.45. Its reaction up barely filled the gap back to Tuesday’s 16.77 close. Closing above 16.85 would signal another rally leg underway, but meanwhile closing under 16.60 would be bearish.
30-year Treasury Sep Contract (US, ETF: (TLT))
Overnight weakness was recovered into Wednesday’s open and extended to fresh recovery highs at 154-18, which was retraced back to unchanged around 154-00.
Crude Oil Sep Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
The pessimistic reaction to Wednesday’s EIA report didn’t probe any deeper than had Tuesday’s reaction down from retesting the 50.10 target. Closing under 48.25 would signal the rally having ended so that a new pullback could begin.
Natural Gas Sep Contract (NG, ETF: (UNG, UNL))
Retesting Tuesday’s fresh low and holding it would have avoided greeting Thursday’s EIA report from a position of weakness. Also closing above their interim bounce high would have greeted EIA from a position of strength. Wednesday only ranged narrowly, suggesting either a knee-jerk reaction down to fresh lows regardless of its recovery, or a knee-jerk reaction up that fails.
Mid-day Update… A little slower on the uptake.
Morning’s deep drop consolidating.
Breaking under this morning’s 2468.75 bias-down signal between 10:15-10:30 managed to invalidate the no-bias signal that had been triggered. Extending down to 2363.50 was recovered to probe 1 point above 2468.75 before noon. But reacting down 4 points has settled in for an afternoon no-bias environment.
Exiting the bias environment back under 2465.00 would likely resume the decline and probably at least test 2458.50. Almost any lower than that — or just closing under 2362.75 — would complete the Head & Shoulders topping pattern we’ve been traction.
Otherwise, rallying this afternoon could help to invalidate the Head & Shoulders in favor of fresh highs. Only closing positive today would be bullish, but the groundwork could be laid.
Look ahead: Economic Calendar – for Thu Aug 3, 2017
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Thursday’s calendar is busy, with the Bank of England policy statement greeting the Pound’s tremendous run. Two pre-open reports might give more insight into sentiment ahead of Friday’s payrolls data. The three post-close items don’t have a reliable track record for influencing price action. But close proximity of their releases could enhance the reaction to an outlier number.
BOE Policy Statement
7:00 AM ET
Challenger Job-Cut Report
7:30 AM ET
Jobless Claims
8:30 AM ET
Gallup Good Jobs Rate
8:30 AM ET
Bloomberg Consumer Comfort Index
9:45 AM ET
PMI Services Index
9:45 AM ET
Factory Orders
10:00 AM ET
ISM Non-Mfg Index
10:00 AM ET
EIA Natural Gas Report
10:30 AM ET
Fed Balance Sheet
4:30 PM ET
Money Supply
4:30 PM ET
Afternoon Bias
| WED afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2475.50 | 2472.50 |
| …would target | 2480.75 | 2478.00 |
| Bias-down: under | 2467.75 | 2465.00 |
| …would target | 2461.50 | 2458.50 |
| 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.