Posts by Rod David
Post-open Review… Artificial gets real.
Strong-handed buyers step aside.
The open quickly pierced yesterday’s 2347.50 low by several ticks and then bounced up to 2351.75. But only briefly, as a deeper drop tested 2341.00.
Its reaction up attacked yesterday’s lows as resistance, but resolved down again. This time, much deeper, down to 2334.75.
Yesterday’s opening setup, afternoon bounce and positive close all indicate that strong-handed sellers are marginalized. And yet another downleg is developing in reaction to headlines. That’s the behavior of impatient weak-handed sellers.
The near-term effect on price can be indistinguishable. Down is down. How far down and whether it stays down makes the difference.
Exiting the bias environment back above its 2343.50 bias-down target would confirm that strong-handed sellers remain marginalized. It might also start to suggest that strong-handed buyers are attracted. Otherwise, not yet rejecting these fresh lows would suggest much lower levels are in-play, essentially 2327.00, 2321.00 and potentially 2311.00.
The First Trade & Pre-open Tour Recording…
Proper context can start the day with a solid win and make all the difference.
NEW DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
[IGNORE MY REQUEST TODAY TO TEST THE ADOBE RECORDING]
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A
Through the prior close…
Not already trending down at Monday’s open had signaled that the current range is bottoming. Rallying through the open to attack 2363.00 had marginalized strong-handed sellers. A pullback was expected, regardless of its catalyst, which happened to be a headline about Chinese troops amassing at N. Korea’s border. The drop to 2347.50 was recovered to within 3 points of the morning’s high. On a bullish note, that triggered bias-up to create new “unfinished business above” at 2362.75. Also, the close was in positive territory. But closing under the morning’s high doesn’t yet signal the pullback has ended.
Overnight action’s new info…
Price action has been contained within the range of yesterday afternoon’s recovery. Barely. Globex began by trending back down to touch yesterday’s 2347.50 low. The balance of the night firmed back up to yesterday’s 2352.50-2353.50 close, which is still being tested now.
If, then…
Probing Monday above Thu-Fri ~2361.00 highs has created a new threshold for the rally potential to remain alive. Tuesday’s open should so what Monday did not, by quickly recovering back above the probed highs. That’s not at all assured. Already rallying overnight was the likeliest path to fulfilling this bullish template. The open is still two hours away as of this writing, and price being unchanged is in proximity to start rallying. Unfinished business above at 2362.75 and 2364.50 would be the likely objectives, but opening lower could instead allow a new downleg to begin anyway.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2350.50 would be unlikely to trigger the 2349.00 bias-down signal at 10:15. Exiting the open under 2346.25 would be likely to trigger bias-down. Exiting the open above 2359.00 would be likely to trigger the 2357.00 bias-up signal.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2360.25 | 2357.00 |
| …would target | 2365.75 | 2362.50 |
| Bias-down: under | 2352.25 | 2349.00 |
| …would target | 2346.75 | 2343.50 |
| Signal status: BIAS-DOWN, BIAS-DOWN 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)
Happy Passover to those subscribers celebrating this evening and this week.
Ranging through Monday afternoon’s bias environment, and into the final hour, is the opposite of trending. It’s consolidating. Consolidating entirely in positive territory is a sort of anchoring. Strong hands don’t typically wait until the session’s last possible window before breaking lower, not from an anchored consolidation in positive territory.
That describes Monday’s late dip. It began from the upper-end of the afternoon’s 2354.50-2360.00 range, collapsing to its lower-end during the 3:10-3:20 proxy window. Still in positive territory, the 3:37-3:52 position-squaring eked out fresh afternoon lows down to 2351.75. Still in positive territory.
Anxiousness ahead of Yellen’s post-close speaking engagement? Some quarterly earnings due? More global geopolitical concerns? Limited participation ahead of the evening’s Passover holiday celebrations? Whatever prevented resolving up through the close, it wasn’t able to turn the market negative.
Of course, there’s nothing inherently bullish about closing unchanged. Regardless of the potential downside that was avoided, the market remains in proximity to starting down that road.
Monday’s open needed only to avoid initial weakness for maintaining the potential of a morning rally. Due to probing above Thu-Fri ~2361.00 highs without closing above them, Tuesday’s open needs to rally quickly, if not already be rallying overnight. The only unfinished business is above, now at 2362.75 in addition to 2364.50. Opening lower anyway would be bearish.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.
Mid-day Update… It’s time to resolve this.
If weak-handed selling absorbed, then strong-handed buying should begin.
Monday morning’s pullback fulfilled its 2351.50 potential. And that was just during the morning. The origin of the move and its timing suggested its sponsorship was weak-handed. That didn’t prevent probing a little deeper to 2347.50 as the noon hour began. But its timing also suggested weak-handed sponsorship.
Suggesting weak-handed sponsorship is all we have, until the close. There are still some clues — like isolating the deeper dip to the noon hour, and like triggering the afternoon’s 2355.75 bias-up signal. Probing this morning’s high would be a clue, too, but only 2360.00 is being tested,
The final clue would deprecate the suggestion, by closing above Thu-Fri ~2361.00 prior highs. Now entering the final hour just under it, simply ranging flat-to-higher for an hour seems unlikely. This afternoon’s 2362.75 bias-up target is now “unfinished business above.” Add it to 2364.50.
Back under 2356.00 would suggest another downdraft underway, potentially undermining that sellers have been weak-handed. Otherwise, fresh highs today remain possible, if not also likely.