Daily Spot

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Today’s Highlight Mario Draghi followed Thursday’s words with deed Friday. After assuring markets that the ECB would defend the Euro to the death, new efforts were announced. That’s the good news. The bad news is that the impact of Draghi II was sustained only among stocks, while other intraday reactions were retraced entirely (currencies), modest (Gold), or non-existent (Crude Oil)..

Dollar Basket Sep Contract (DX, ETF: (UUP, UDN)) Wednesday and Thursday’s gap down did not trend down intraday, confirming that the drop has been only a correction. Friday’s knee-jerk reaction down was soon retraced entirely. Any delay in resuming the decline Monday would be likely to fill the gap back up to the rally’s high close.

Eurodollar Sep Contract (EC, ETF: (FXE)) Two consecutive session of gapping up and ranging sideways do not form a durable uptrend. Nor can they launch a durable uptrend. So, Friday’s spike up on Draghi II were ultimately and all too easily retraced entirely. Any delay in resuming the rally Monday would be likely to fill the gap back down to the decline’s s low close.

Gold Aug Contract (GC, ETF: (GLD)) The breakout’s 1622.00 target was tested up to 1626.60. Its reaction down still closed positive on the day to prevent sellers from gaining traction. Closing under 1614.00 would start to signal momentum reversing down.

Silver Sep Contract (SI, ETF: (SLV)) The potential to 26.75 was realized Friday, but its reaction down still returned to 26.50. Unless immediately recovered Monday, a test of fresh lows down to 26.00 remains likely.

30-year Treasury Sep Contract (US, ETF: (TLT)) Thursday’s delay in reacting down from the rally’s longstanding 153-04 target did not prevent Friday’s GDP triggering a gap down to Tuesday’s 151-22 prior low that extended down to 150-18. Draghi II comments triggered another plunge down to 149-08. Back above 150-14 would signal a corrective bounce underway.

Crude Oil Sep Contract (CL, ETF: (USO)) Another day spent ranging narrowly around the 90.00 buy signal without triggering it, undermines the credibility of 90.00‘s break being able to trigger a new upleg.

Natural Gas Sep Contract (NG, ETF: (UNG, UNL)) The 3.03 pullback limit test (basis Sep, vs. 3.05 basis Aug) was probed Friday down to 2.98, but 3.03 was still being tested into the close to prevent sellers from gaining traction.

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A daily summary of high-profile members of several complexes…[pay] View a more detailed discussion of each at the end of today’s Market Wrap.

Today’s Highlight Surprise remarks from the Eurozone had an unsurprising effect on markets overnight. More interesting is their lack of follow-through intraday. Look out for retracing Wednesday night’s moves if new extremes Thursday night or Friday were to fail.

Dollar Basket Sep Contract (DX, ETF: (UUP, UDN)) Draghi’s remarks easily exploited Wednesday’s gap down that had not yet recovered. Thursday’s reaction extended sharply lower from 83.65 down to 83.00. That’s essentially where the session closed despite testing 82.65 intraday. Back above 83.17 would signal a retest underway of the 84.15-84.25 high.

Eurodollar Sep Contract (EC, ETF: (FXE)) Draghi’s remarks easily exploited Wednesday’s gap up that had not yet failed. Thursday’s reaction gapped up from 1.2170 to test the prior two weeks’ highs at 1.2300. Like Wednesday, price did not trend up intraday, inhibited by the gap back to Tuesday’s 1.2165 close.

Gold Aug Contract (GC, ETF: (GLD)) The attraction back up to 1622.00 was attacked to within $2 in reaction to Draghi’s remarks. Its test remains likely so long as 1612.00 now holds as support.

Silver Sep Contract (SI, ETF: (SLV)) Wednesday’s premature bounce initially extended higher in reaction to Draghi’s remarks. But 26.75 resistance held to push price back under 27.50. Fresh lows testing 26.00 remain likely.

30-year Treasury Sep Contract (US, ETF: (TLT)) It is not surprising that price was weaker amid the Dollar’s drop and the stock market’s rise. It is surprising that price was not very weak since the rally’s 153-04 target had been met and held. Wednesday’s 152-10 held a couple of tests as support, and the close was still testing 152-16 whose break would signal the rally’s momentum had ended. One more higher high cannot be discounted, like a retest of Tuesday’s overnight 153-11 high.

Crude Oil Sep Contract (CL, ETF: (USO)) Fresh highs in reaction to Draghi’s remarks probed the 90.00 buy signal. The probe did not extend higher, as the balance of the session ranged sideways around 90.00. Any further delay to extending higher would be bearish.

Natural Gas Aug Contract (NG, ETF: (UNG, UNL)) Wednesday’s drop to its 3.05 pullback limit was rejected by Thursday’s gap up. And intraday dive to lower lows on EIA news was recovered to close positive. This setup is a “pivot reversal” that is likely to extend to fresh highs without delay. Not extending higher immediately would be bearish.

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A daily summary of high-profile members of several complexes…[pay] View a more detailed discussion of each at the end of today’s Market Wrap.

Today’s Highlight Crude Oil’s successful test of its prior low Tuesday was not as impressive as Wednesday. Its deeper test reacted up higher through the close. A second consecutive higher close Thursday would be very bullish.

Dollar Basket Sep Contract (DX, ETF: (UUP, UDN)) Tuesday’s unconvincing probe of fresh highs reacted down Wednesday. The open gapped down to Monday’s close, almost as if Tuesday’s session never happened. But it left outstanding a gap at Tuesday’s 84.15 that can inhibit a downleg from getting underway yet.

Eurodollar Sep Contract (EC, ETF: (FXE)) Tuesday fulfilled the minimum requirement for a third lower close, allowing a gap up Wednesday. Now there is gap outstanding back to Tuesday’s 1.2165 close that will inhibit a rally from beginning.

Gold Aug Contract (GC, ETF: (GLD)) Tuesday night’s rally took price sharply higher, through both the 1584.00 bounce limit and also above prior highs to 1610.00. If not reversed down almost immediately Thursday, the bounce could test 1622.00 first.

Silver Sep Contract (SI, ETF: (SLV)) Tuesday night’s rally circumvented the natural test of prior lows down to 26.00 that would have formed a more durable bottom. The detour could still test 27.75 before peaking.

30-year Treasury Sep Contract (US, ETF: (TLT)) Wednesday’s gap down to 152-10 from the rally’s 154-03 target — despite having tested fresh highs overnight up to 154-11 — offered further evidence that buying pressure is fulfilled. A bounce filled the gap back to Tuesday’s close, which held as resistance. Still need a close under 153-16/153-20 to signal momentum reversing down.

Crude Oil Sep Contract (CL, ETF: (USO)) Tuesday’s test of the 87.85 prior low was still shallow. It would have sufficed to launch a rally, but no buy signal was triggered before Wednesday probed a fresh low down to 86.85. Its intraday recovery back up through 89.00 is much more impressive. Closing above 90.00 would confirm the rally had resumed.

Natural Gas Aug Contract (NG, ETF: (UNG, UNL)) Wednesday’s gap down tested the rally’s 3.05 pullback limit by late-morning. The balance of the session ranged sideways with it serving as support.

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Today’s Highlight The long bond hit its long-standing target Tuesday. At the same time, the attraction back up to Monday’s gap open was neutralized. No higher target was put into play. If  this doesn’t mean that stock market disincentives like a falling Euro and a flight-to-safety are easing, then the bond may be readying a surge higher.

Dollar Basket Sep Contract (DX, ETF: (UUP, UDN)) Monday’s ranging around the recent 84.00 prior highs did not extend higher immediately Tuesday. But fresh highs were probed eventually up to 84.25. The breakout is very fresh, and should not need a pullback before extending higher, but still gets a benefit of the doubt so long as 83.85-83.95 holds as support.

Eurodollar Sep Contract (EC, ETF: (FXE)) No gap up Tuesday invalidated Monday’s second consecutive lower close, requiring a third lower close. The next lower target at 1.1915 remains intact so long as 1.2140 holds resistance.

Gold Aug Contract (GC, ETF: (GLD)) Tuesday’s volatile session recovered a gap down to 1572.50 back up to 1584.00, that nevertheless reversed down to fresh session lows testing 1568.00. And yet another bounce ended the day around unchanged testing Monday’s 1577.00 close.A new downleg remains likely so long as 1584.50 continues holding as resistance.

Silver Sep Contract (SI, ETF: (SLV)) Tuesday’s gap down recovered to retest Monday’s high, but the pattern resolved down into the afternoon. Support at 26.00 is being chipped away, all but requiring new lows at this stage.

30-year Treasury Sep Contract (US, ETF: (TLT)) Having retraced Monday’s 152-28 gap up above prior highs, to back under prior highs, Monday’s 152-28 gap up could be filled to form a durable top. Its test Tuesday included touching the rally’s 153-04 target, as was expected. The close was still testing Monday’s 152-28 opening gap up. Back under 152-16/152-20 would be start to rob the rally of its traction

Crude Oil Sep Contract (CL, ETF: (USO)) A fresh low Tuesday held a test of the 87.85 prior low that Monday’s crash had stopped optimistically short of touching. Tuesday’s dip to 87.43 did not react up violently as if to restart the rally, but closing above 90.00 should rally aggressively. Closing under 87.50 would jeopardize the recovery potential.

Natural Gas Aug Contract (NG, ETF: (UNG, UNL)) The rally extended to a second higher high at 3.19 since confirming its breakout, helping to entrench the rally. Pullbacks must now hold any test of 3.05 — and preferably 3.11 — to maintain the 3.26 target.

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Today’s Highlight Crude Oil’s big gap down held above the last relative low. That’s a lot of selling pressure to expend in an uptrend without even signaling a trend reversal. A better low would have actually probed the prior low and recovered it intraday, but that would still be credible Tuesday for ending the pullback.

Dollar Basket Sep Contract (DX, ETF: (UUP, UDN)) Monday’s probe of fresh highs did not gain traction, as the session ranged sideways around prior highs. It barely closed positive. A fresh high close Tuesday above 84.15 would be credible for launching a new durable rally leg. Otherwise, at least a pullback to test 83.35 support is now likely.

Eurodollar Sep Contract (EC, ETF: (FXE)) Monday morning’s price action mirrored Friday’s character as it often does, pushing price to new relative lows at 1.2075. Monday did close negative, but that followed a substantial intraday bounce up to 1.2154 that almost touched “higher prior lows.” Gapping up immediately at Tuesday’s open would be credible as a Double Bottom with prior lows. The trend otherwise remains down.

Gold Aug Contract (GC, ETF: (GLD)) Friday’s impatient buyers had narrowly prevented the session low from filling the gap back to Wednesday’s lower 1573.80 close. Monday’s consequence was an overnight dive to new relative lows at 1562.00. Intraday action trended up exclusively, but remained in negative territory, likely at least to retest Monday’s 1565.80 open below.

Silver Sep Contract (SI, ETF: (SLV)) Monday’s gap down to probe last week’s lows down to 26.62 did not extend down intraday. But the session-long bounce did not recover positive territory, making lower lows likely.

30-year Treasury Sep Contract (US, ETF: (TLT)) Stocks and the Euro falling apart overnight triggered a steep bond market rally that attacked its 153-04 target up to 153-01. And now that last week’s “lower prior highs” have been tested as support down to 152-00, a retest of Monday’s 152-28 can complete the rally so momentum would be free to reverse down.

Crude Oil Sep Contract (CL, ETF: (USO)) Monday’s gap down from 91.80 to 88.31 stopped short of touching last Tuesday’s 87.79 prior low. It may yet be probed intraday, but a corrective bounce up to 91.00 remains possible, if not likely — a bounce that could gain traction to resume the rally.

Natural Gas Aug Contract (NG, ETF: (UNG, UNL)) Last week’s breakout and confirmation helped Monday’s session to avoid some of the carnage elsewhere, and to extend up to fresh highs.

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