Posts by Rod David
The First Trade… New Year’s bash coming early?
Proper context can start the day with a solid win and make all the difference.
CHARTROOM LINK
(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Thursday’s open was greeted at the upper-end of an overnight range that had been resisted by 2247.00. A brief overnight low had neutralized the attraction below at 2243.00. The open popped up to touch 2250.00. Holding its test through the opening 15 minutes of volatility made the 2248.75 bias-up signal unlikely to trigger. Trending back down into the noon hour probed fresh lows down to 2239.50. That held a test of the afternoon’s 2240.50 bias-down signal, and avoided discovering whether there is an air pocket any lower. The afternoon bias environment attacked its 2247.00 bias-up signal, and the balance of the session ranged sideways. No more “unfinished business below” remains outstanding.
Overnight action’s new info…
Only firming back to unchanged didn’t reverse momentum up. That hasn’t prevented overnight action from trending up. A probe above yesterday morning’s 2250.00 high by nearly 3 points eventually retraced to attack 2248.00 through Europe’s opens. But price is otherwise ranging narrowly around 2250.00.
If, then…
The last unfinished below was neutralized yesterday, but price only returned to unchanged. That’s not momentum reversing up. Now overnight action has firmed further, and the open is currently indicated to gap up to yesterday’s high. That’s not momentum reversing up, either. Avoiding another downleg today will require recovering yesterday’s high through the open, or at least triggering bias-up. The reward could be a 5-7 point air pocket above to 2255.00-2257.00. The alternative could resume the decline, and discover an air pocket below to 2230.00, on the way to 2215.00. There are unusual influences at year-end, unrelated to volume evaporating ahead of the holiday weekend, and unrelated to the normal Friday Factors.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2250.00 would be likely to trigger the 2248.00 bias-up signal at 10:15. Exiting the open under 2245.25 would be unlikely to trigger bias-up.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2252.75 | 2248.00 |
| …would target | 2258.00 | 2253.25 |
| Bias-down: under | 2246.00 | 2241.25 |
| …would target | 2240.00 | 2235.25 |
| Signal status: BIAS-DOWN, 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)
It remains to be seen whether or not there’s an air pocket below. There was room under the 2243.00 prior low down to 2240.50. It was tested once, by 1 point, by the first bar probing under it, and during the noon hour. So, its test held.
Probing under it, instead of only overlapping it, would have revealed the air pocket with multiple consecutive large downbars. No specific alternative resolution was required in the absence of an air pocket. The afternoon bias environment attacked its 2247.00 bias-up signal, and the balance of the session ranged sideways.
Although not obvious by only firming back up to unchanged, Thursday neutralized the last of “unfinished business below.” But momentum didn’t reverse up by only firming back to unchanged. There are unusual influences at year-end, unrelated to volume evaporating ahead of the holiday weekend. And those influences could still trigger trending on Friday.
Great suggestion regarding the Market Wrap… Pause the recording at the presentation’s end, then finish recording at the close so it is included in the video. I’ll start that on Friday, thank you!
Details and other markets coverage are discussed in the 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))
Wednesday’s drop neutralized the outstanding attraction below, and held its test to avoid putting lower targets into play. Already gapping up Thursday risks leaving another gap outstanding below, but that didn’t prevent trending back up to attack the 1.0540 prior highs intraday. A second consecutive higher close Friday would confirm a bottom is in.
Gold Feb Contract (GC, ETF: (GLD))
Monday night’s test of the 1147.00-1149.00 bounce limit was retested overnight, gapping up Thursday. The interim consolidation formed “lower prior highs” at 1142.50, and breaking lower would reinstate the attraction down to 1118.00. Meanwhile, fresh highs have extended to test 1160.50, and can extend to 1167.00 unless a reaction down were to close under 1147.00.
Silver Mar Contract (SI, ETF: (SLV))
Overnight strength attacked the 16.20 buy signal which was then probed intraday, suggesting that no “unfinished business below” remains outstanding.
30-year Treasury Mar Contract (US, ETF: (TLT))
Thursday’s open immediately exceeded Wednesday’s bounce to the 149-24 buy signal. Eventually probing above it intraday to 150-12 was reversed back down to 149-24, undermining a close above it. Nevertheless, a second consecutive higher close would target 151-12.
Crude Oil Feb Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Wednesday’s post-close reaction to API and Thursday morning’s reaction to EIA maintained enough pressure to inhibit the rally from resuming, but not enough to reverse the trend down. Reversing down is unlikely before at leas retesting the three-week old Sunday night gap up.
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
Was Wednesday’s surge above 3.75 to 3.90 the result of rolling the front-month from Jan to Feb? Gapping down Thursday is consistent with that possibility, as was trending back down to 3.75. But closing under 3.62 is the deciding factor, and its break should then trend down sharply.
Mid-day Update… Anchor outweighed?
Sliding through lower objectives and support.
Buyers expended a lot of effort this morning to avoid negative territory. The resulting isolation setup could have 
launched a multi-session rally. But it was never any more productive than simply to avoid negative territory.
And meanwhile, the 2248.75 bias-up signal held its test to avoid triggering. That put into play an offsetting test of the 2242.00 bias-down signal.
The isolation setup can still be effective. From testing 2242.00 and now the afternoon’s 2240.50 bias-down signal, which has extended down to 2239.50. The noon hour is allowed a little more room for noise. And the the noon hour dismiss the low’s oversold RSIs from requiring a retest.
Currently, a bounce is testing 2243.00 as resistance. The nearest buy signal would be triggered above 2244.50. Otherwise, triggering the 2240.50 bias-down signal may be much more productive than the bias-down target implies.