Posts by Rod David
The First Trade & Pre-open Tour Recording… Volatile, to the last drop.
Proper context can start the day with a solid win and make all the difference.
DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A
Through the prior close…
Snatching defeat from the jaws of victory! An overnight rally had postured Thursday’s open to challenge Wednesday’s 2762.00 high only 90 minutes earlier. Then headlines triggered a plunge through Wednesday’s 2754.00 close on the way down to 2736.50. Extending down post-open to 2730.25 created an anchor that would doom to failure any subsequent bounce. That didn’t prevent rallying up to 2755.25 through the noon hour, but it did limit any higher high to a blip-up to 2758.25. Finally, the bounce began retracing as the last half-hour fell to 2743.00-2744.00.
Overnight action’s new info…
The bounce continued unraveling through the Globex open to retrace Thursday’s 2739.50 open. The fall extended to probe 5 ticks under Thursday’s low to 2729.00 just before Europe’s opens. And that was the end of that. Rallying since then has recovered into positive territory to test the 2744.50 earlier Globex high up to 2749.25.
If, then… (notes to accompany the Tour recording)
The anchor at yesterday’s low had doomed the subsequent rally. This setup is now neutralized by having probed a fresh low, and its intraday retest isn’t required. Often a new downleg under it would have developed to compensate for the delay, and may yet develop. Meanwhile, a couple of rally setups are trying to form overnight. Probing yesterday’s low overnight and not retesting it this morning could form an Isolation setup by not probing yesterday’s low through the open. More influential than that would be a Globex-flip setup, which also rejects the overnight probe by opening back above the 2744.50 earlier Globex high (now being tested). The latter setup can be as bearish as it would have been bullish if the opportunity to trigger is presented AT the open, but isn’t exploited THROUGH the open.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2744.50 would be unlikely to trigger the 2741.25 bias-down signal at 10:15. Exiting the open under 2746.75 would be unlikely to trigger the 2753.00 bias-up signal.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2753.25 | 2753.00 |
| …would target | 2761.25 | 2761.00 |
| Bias-down: under | 2741.25 | 2741.25 |
| …would target | 2733.50 | 2733.50 |
| Signal status: BIAS-UP, BIAS-UP TARGET EXCEEDED | . | |
| BIAS VIDEOS… INTRO // EXAMPLE | ||
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)
A funny thing happened Thursday on the way to gapping up above Wednesday’s 2762.00 high. An earlier overnight probe above it had reacted down, and was recovered up to 2760.00, when headlines triggered a plunge to 2736.50.
Wednesday’s close had overlapped its open, which often appears at trend extremes. Extending down post-open to 2730.25 created an anchor that suggests momentum has reversed down. None of which prevented rallying up to 2755.25 through the noon hour. But the anchor’s position of weakness should doom the bounce to failure.
The afternoon bias environment didn’t extend the rally at all. A late break lower fell to 2744.50 at the cash session close and 2742.50 into the futures close. The anchor at Thursday’s low has yet to be retested, and should be probed by a new downleg to compensate for the delay.
Otherwise, having trended down into Thursday’s close, gapping up above its 2754.50 bias environment high could form a session-long rally. The final hour’s blip-up to a higher high would have to be dismissed — which I’m willing to do, since it was triggered by a headline. Extending higher Friday morning would also raise suspicions about the WedEX signal’s reversal to bearish.
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 Mar Contract (EC, ETF: (FXE, UUP))
Overnight weakness was erased before Thursday’s open, but the 1.1333 signal was only tested and not triggered. Its recovery would be likelier now to also trigger 1.1375 and launch a more substantial rally.
Gold Feb Contract (GC, ETF: (GLD))
Thursday’s bounce only touched 1217.00 which must still break higher to trigger a retest of “unfinished business” at 1228.30 and probably also 1233.00.
Silver Mar Contract (SI, ETF: (SLV))
Gapping down under prior lows Thursday can’t tolerate a second consecutive lower close for the pattern to include any near-term recovery up to “unfinished business” at 16.16. Closing back above 15.70 would now signal a recovery underway.
30-year Treasury Mar Contract (US, ETF: (TLT))
Gapping up Thursday to the prior upleg’s 146-04 target extended sharply higher to fill the gap back to last week’s 146-28 high close. Almost any follow-through Friday would be credible both for extending higher intraday, and for resuming the prior upleg.
Crude Oil Mar Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
A slightly higher high overnight didn’t prevent dipping Thursday to test the 53.30 buy signal as support. But it was recovered back up to Wednesday’s intraday highs attacking 54.75 and remains likely to launch a new rally leg.
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Greeting Thursday’s EIA from neither a position of strength nor weakness made no difference to price action which barely acknowledged the report, and only continued ranging very narrowly sideways around unchanged.
Mid-day Update… Another shoe?
Post-open paradigm shift hasn’t shifted back.
The opening action was impressive. As in, it made an impression. Two of them, both with the same setup — 
opening back under Tuesday’s last relative lows at 2838.75 and 2841.50. Maintaining their break through the opening 15 minutes of volatility formed an anchor, so that reacting up has come from a position of weakness. Meanwhile, the same opening action inverted the WedEX signal to passively bearish by proxy.
The position of weakness didn’t prevent the morning’s bounce 18 points from 2730.25 up to 2748.25. Its reaction down to 2735.50 was reversed up 20 points through the noon hour to 2755.25.
Flat-to-lower narrow ranging still managed to trigger the 2747.75 bias-up signal, while also holding a test of its 2753.00 bias-up target. It’s still a bias-up environment, and back above 2755.75 would start to signal a bigger rally underway.
Otherwise, topping should still close back under 2751.00, or at least overlapping it, but preferably back under Tuesday’s last relative lows at 2838.75 and 2841.50.