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Post-open Review… The whimper persists.
No improvement to last night’s gap up.
Sunday night’s Globex open had gapped up in reaction to Trump’s weekend China trade tweet. Despite a presumably bullish environment and the tweet’s catalyst, the gap only corrected Friday’s last reaction down. Only firming overnight suggested no strong-handed buyers were coming.
Weak-handed reinforcements could have arrived, their reward being to retest Friday’s high and its borderline overbought RSIs up 2525.25. But 2512.50 overnight high had reacted down to 2501.00, and its post-open blip-up has reacted down to 2494.00.
Nevertheless, this is a bias-up environment, whose 2495.50 bias-up signal should define the window’s lower-end. A bounce back up to the 2504.50 bias-up target wouldn’t be surprising, since 3 of the first hour’s 5 15-minute checkpoints overlapped it.
Lower lows would target filling the gap back down to Friday’s 2486.00-2487.00 close. Delaying lower lows until this afternoon would be less defensible, and could more easily extend down into a collapse.
The First Trade & Pre-open Tour Recording… Out with a whimper?
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…
Friday’s close barely lost 5 points from Thursday’s 2492.00 close. Not for lack of trying, with two overnight probes of higher highs, and a third higher high Friday afternoon. The last peaked 2 points short of its potential to 2525.25 before attacking the morning’s low down to 2477.00, and closing at 2487.00. Three higher highs, one intraday, yet each reaction down barely probed into negative territory. Both 1-minute and 3-minute RSIs were on the cusp of being overbought at the late high.
Overnight action’s new info…
Sunday night’s Globex reacted immediately to the weekend’s favorable China trade tweet from Trump. The open’s gap up retraced 61.8% of Friday’s late drop at 2505.50. Flat-to-higher ranging has recently extended to 2512.50 — still 2-4 points under the retracement’s room for noise, and under Friday’s high.
If, then… (notes to accompany the Tour recording)
With apologies to Eliot, 2018 seems poised to go out not with a bang, but with a whimper. This could be the effect if the algorithms (i.e. hallow men) are turned off while their human oversight is less available. Gapping up and essentially trending up all night has barely even attacked the room for noise back up to Friday’s high. I don’t interpret this muted upside as being potentially bullish restrained optimism, not yet. A lot of buying pressure was expended intraday Friday to prevent its reactions down from becoming a downleg, and that ineffectual optimism may yet have bearish consequences. Meanwhile, Friday’s fresh afternoon high neutralized any structural unfinished business above. Technical unfinished business above at the high’s simultaneously overbought RSIs may still retested up to the calculable 2525.25 objective — neither one prevents a downleg while outstanding, and could enable a downleg/collapse upon being neutralized. All of which is within the context of a temporary bear market rally from last Tuesday night’s 2317.00 low, and the possibility that year-end institutional buying has front-run itself to already be done. Again, I point to the muted overnight gains has been a temporary bear market rally. Extending higher anyway could extend to the next higher bounce potential at 2548.00-2556.00.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2507.50 would be likely also to exceed the 2504.50 bias-up target at 10:15 to renew the bias-up signal. Exiting the open above 2499.50 would be likely at least to trigger the 2495.50 bias-up signal at 10:15.
Morning Bias
| MON morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2495.75 | 2495.50 |
| …would target | 2504.75 | 2504.50 |
| Bias-down: under | 2481.50 | 2481.50 |
| …would target | 2474.00 | 2474.00 |
| Signal status: BIAS-UP, BIAS-UP TARGET MET | . | |
| 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)
Three distinct probes above Thursday’s 2499.00 high each reacted back into negative territory Friday. Each reaction down was on the precipice of reversing the trend down, but held.
A lot of buying pressure was expended to counteract the last reaction down. It was testing the afternoon’s 2482.00 low before entering the position-squaring window at 3:37. Already having probed a fresh high, there was no unfinished business above requiring a retest. So, Monday’s likely resolution is either to compensate for Friday’s delay by gapping down, or else for a gap up to probe fresh highs.
Gapping down could extend, if not collapse, as the market realizes two things: 1) that everyone has been front-running themselves to already deploy quarter-end and year-end purchases, and 2) that the recovery from Tuesday night’s 2317.00 low has been a temporary bear market rally. A slightly higher high testing 2525.25 would be preferable before reversing down, but not necessary. Gapping up could soon fulfill 2525.25, and either reverse down from there or else extend to the next higher bounce potential at 2548.00-2556.00.
Details and other markets coverage are discussed in the post-market Wrap recording here.
THERE IS NO SATURDAY REVIEW THIS WEEKEND.
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))
Rejecting Wednesday’s close under prior lows by gapping up back above them Thursday, was improved by also closing above the 1.1500 buy signal. A second consecutive higher close Friday would confirm, but it was still being tested as support.
Gold Feb Contract (GC, ETF: (GLD))
Fresh highs overnight fulfilled the 1284.00 target. A new trend extreme prohibits the same session from triggering a reversal signal. Now the rally can extend to 1319.50 so long as pullbacks hold 1273.50 as support.
Silver Mar Contract (SI, ETF: (SLV))
Already probing higher overnight and maintained through Friday’s close fulfills the minimum requirement of Wednesday’s confirmed breakout for at least an eventual third higher close. Upside momentum remains intact so long as pullbacks now hold any test of 15.30 as support.
30-year Treasury Mar Contract (US, ETF: (TLT))
Thursday’s close back above the 145-08 buy signal didn’t extend higher intraday, or overnight, and desperately needs a second consecutive higher close on Friday to confirm the consolidation is resolving in a new upleg. Otherwise, closing back under 144-22 would trigger a downleg.
Crude Oil Feb Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Flat-to-lower ranging continued hovering optimistically above the 43.35-44.15 pullback limit whose test would be likely to launch a bigger recovery leg.
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
Two consecutive higher sessions since testing the decline’s 3.26 target were retraced entirely Friday at Wednesday’s intraday low. A basing/bottoming pattern is free to begin forming at any time, sooner rather than later to avoid letting the reversal extend.