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Morning Bias
| MON morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2711.50 | 2710.25 |
| …would target | 2719.25 | 2718.00 |
| Bias-down: under | 2700.00 | 2698.75 |
| …would target | 2692.50 | 2691.25 |
| Signal status: NO-BIAS, TESTED BIAS-DOWN SIGNAL | . | |
| 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)
Friday’s open was preceded by the monthly Employment Situation report. Its reaction had surged 12 points back up to Thursday’s 2709.00 high. The volatility was deceptive, itself preceded by a relatively narrow overnight range. Even that was contained within Thursday afternoon’s range. So, trending beyond the range wasn’t likely, especially if not done early.
If we can’t have trending, then at least we want to know it’s unlikely. Still, we gave trending one opportunity, which the first hour tried by probing fresh highs up to 2716.00. The bias-up signal even triggered — late, but the 10:30 grace period contained fresh highs to confirm. Although that makes the 2719.50 bias-up target more reliable, the balance of the Friday instead returned back into the earlier range.
We knew with greater certainty that trending intraday wasn’t likely. Nevertheless, the morning’s reaction down was recovered enough at the bias environment exit for the unmet bias-up target to become “unfinished business.” And the second consecutive close above 2701.00 confirms the rally’s next higher objective at 2756.00 is in-play. None of which prevents an interim detour with room down to 2656.00-2666.00.
Details and other markets coverage are discussed in the post-market Wrap recording here.
PLEASE JOIN US AT 9:30 AM ET FOR THIS WEEKEND’S SATURDAY REVIEW.
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))
Thursday’s pullback to 1.1485 reacted up Friday to test 1.1520, whose recovery would start to signal the rally had resumed.
Gold Feb Contract (GC, ETF: (GLD))
Friday’s weakness stopped short of touching “lower prior highs” down to at least 1317.00 that must be tested before a bounce can neutralize the attraction back up to the 1328.30 gap up that wants to be retested. Its test wouldn’t necessarily form a top, but r\Resuming the rally prematurely won’t be reliable for extending higher.
Silver Mar Contract (SI, ETF: (SLV))
“Lower prior highs” at 15.97 were tested Friday, so that any reaction up to the 16.13 gap can neutralize its attraction above.
30-year Treasury Mar Contract (US, ETF: (TLT))
Trending back down intraday Friday retraced all of Thursday’s post-open rally, into the gap back to Wednesday’s close and holding its room for noise down to 145-28. The rally cannot afford to delay resuming.
Crude Oil Mar Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Thursday’s intraday reversal down into negative territory from the morning’s fresh recovery highs was retraced entirely Friday to suggest a four-day setup is forming. Its fourth day in the sequence is Monday, and probing fresh highs intraday would be unlikely to hold through the close. So, closing higher anyway would be very bullish.
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Already extending lower Thursday after having greeted the EIA report with essentially a position of weakness, Friday extended the decline to lower lows. Fresh lows into the weekend in this market tend to probe lower on Monday at some point, regardless of the close.
Post-open Review… Worst fears.
Yesterday’s range is sticking.
I voiced one concern before the open for today’s session: that the pre-open volatility was deceptive, still being contained within yesterday afternoon’s range. On Fridays, not already trending through the open, or at least during the morning, can be very difficult to trend again before the weekend.
The open hinted at some new volatility, separate from the pre-open Employment Situation reaction. A 10-point pullback through the open down to 2699.00 reacted up to eventually trigger late bias-up. Probing fresh highs up to 2716.00 between 10:15-10:30 adds reliability to a late signal. But price action since then has developed mostly back under yesterday’s 2709.00 high.
While buyers haven’t exploited the bias-up, sellers haven’t retaken control. Exiting the morning’s bias environment at or above the morning’s 2711.00 bias-up signal helps to maintain its influence. And now this afternoon has triggered noN-bias by still testing its 2705.00 bias-down signal, and not triggering it. Sponsorship isn’t making itself apparent, which can be even more limiting on Fridays.
Be careful if trading anyway, trending attempts could still develop. But fading trading attempts and limiting the exposure to several points and/or several minutes continues to be preferable.
Look ahead: Economic Calendar – for Mon Feb 4, 2019
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: No pre-open reports are due Monday. The post-open report isn’t usually high-profile or influential to price action.
Factory Orders
10:00 AM ET
TD Ameritrade IMX
12:30 PM ET