Posts by Rod David
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 Jun Contract (EC, ETF: (FXE, UUP))
Tuesday gapped up to 1.0860 and fluctuated sideways. Gapping down Wednesday could form an Island pattern and trigger a temporary reversal. Otherwise, the rally has room up to 1.0900.
Gold Apr Contract (GC, ETF: (GLD))
Quickly exceeding 1232.50 Tuesday extended sharply higher to test 1248.00 intraday. A second consecutive higher close would target fresh highs above 1265.00. Closing back under 1232.50 would reverse the trend back down.
Silver May Contract (SI, ETF: (SLV))
Tuesday’s early surge through 17.50 extended to 17.62, putting into play a test of 17.90.
30-year Treasury Jun Contract (US, ETF: (TLT))
Extending Monday above the 148-04 bounce target had put into play the next higher objective at 150-06. It was pierced by several ticks Tuesday. Back under 149-12 would signal that the bounce’s momentum had ended.
Crude Oil May Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Tuesday’s dip back under Monday’s low filled the gap back to last Tuesday’s 48.25 gap down. That session’s Island can be probed to fresh lows, but closing back above 48.45 would suggest a durable bottom is forming.
Natural Gas Apr Contract (NG, ETF: (UNG, UNL))
Gapping up Tuesday probed prior highs up to 3.11, fulfilling the likely minimum consequence for Monday having closed above the 3.00 bounce limit. Reacting back down probed a nickel under the new 3.08 pullback limit, while filling the gap back down to Monday’s close. Closing beyond either end of Tuesday’s range can trend in that direction.
Mid-day Update… One and done?
Is it possible for today’s drop to both begin and end a correction?
It’s very rare for a bias signal to be invalidated. This morning’s no-bias signal was triggered by having failed to maintain the probe above its 2374.00 bias-up signal at 10:15.
It was nearly invalidated by probing under its 2364.75 bias-down signal at 10:30, except that it was still being overlapped.
Only one more opportunity remained to invalidate the bias signal. And it was exploited by exiting the bias environment under its 2359.75 bias-down target. Whatever had developed to change the environment so substantially, its new sponsorship is strong-handed. This morning’s bias-up target is not unfinished business above.
Sort of. This morning’s bias-up target is also essentially already unfinished business from yesterday at 2380.00. But for purposes of near-term trending, strong hands are sellers.
The drop’s objective at 2342.00 is being tested now, and probes under it down to 2340.25 are also overlapping it. Any lower could test a prior pattern’s “lower prior highs” down to 2335.50.
Here’s an interesting feature to patterns which is counter-intuitive. Drops that originate from a new high or during its initial reaction down are likely to last through multiple sessions, and then be likely to recover. Drops tend to take one of two widely disparate paths — either out-sizing the high’s initial reaction down in depth and duration, or else running its course very quickly.
So, today’s drop comes after a new high’s reaction has been retraced back toward the high. This is originating from a lower high. It might be short-lived, ultimately holding its test of 2342.00. And if not, it could be much deeper, next targeting 2310.00.
Look ahead: Economic Calendar – for Wed Mar 22, 2017
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Tuesday night’s two Fed speakers aren’t likely to influence price action during off-market hours. Any potential for the intraday reports to influence price action would come from their contradicting each other on housing sector strength.
Loretta Mester Speaks
Tue 6:00 PM ET
Eric Rosengren Speaks
Tue 9:45 PM ET
MBA Mortgage Applications
7:00 AM ET
FHFA House Price Index
9:00 AM ET
Existing Home Sales
10:00 AM ET
EIA Petroleum Status Report
10:30 AM ET
Afternoon Bias
| TUE afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2357.25 | 2353.50 |
| …would target | 2363.25 | 2359.50 |
| Bias-down: under | 2351.25 | 2347.50 |
| …would target | 2345.75 | 2342.00 |
| Signal status: LATE BIAS-DOWN | 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… Buyers blind-sided.
Gap up maintained, not extended, and not defended.
Opening at least 1 point above yesterday morning’s 2376.00 high was almost half the battle to trending up this morning. Maintaining the gap up through the open was a lot of it, too.
The missing link was to actually extend the gap up. But 2376.00 was still being tested when the opening 15 minutes of volatility lapsed. Which is not in itself bearish, but it certainly opens the door.
A very wide door, apparently. The 2374.00 bias-up signal was broken and not triggered. An offsetting test of the 2364.75 bias-down signal was put into play. And it was probed by 2 points at 10:30. Then by another 10 points a half-hour later.
The probe under 2364.75 was also overlapping 2364.75, or else it would have invalidated no-bias. So, is probing under 2364.75 “no-bias trending?” Yes, unless the bias environment exit at 11:30 is under the 2359.75 bias-down target, too.
That looks likely, with 2351.50 being tested now. While RSIs are oversold, and 3-minute RSI is persistently oversold. The next major objective below would be 2342.00.
Back above 2357.50 would instead trigger a bounce. Recovering 2359.75 through 11:30 would next be attracted back up to 2364.75, and potentially also to 2368.00.