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The First Trade & Pre-open Tour Recording… A bouncy night, trying to break free.
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 open followed a steep and then deep drop from Thursday’s 2707.00 cash session close. Already greeting Globex at 2688.00, overnight action had extended down to 2646.00. A 26-point bounce into and out of Friday’s open quickly peaked at 2672.00, and then plunged 44 points to 2627.50. The post-open plunge was isolated between the bias environment’s entry and exit, which tends to hold on Fridays. The setup’s vulnerability to reversing up into the weekend was exploited only temporarily to 2692.00 as the noon hour ended. But another drop attacked 2641.00 before firming into the close — which was all over the place. Cash session ended at 2657.50 on the way up to 2672.00 before futures settled.
Overnight action’s new info…
A false start may be resolving up. Although Sunday night’s open quickly surged to 2682.00, the market then drifted gradually back down to 2660.00 ahead of Europe’s opens. Flat-to-higher ranging around 2667.00 suddenly launched a 16-point surge back to and through the open’s highs, perhaps in reaction China trade headlines. A second surge is now testing 2692.50, up sharply from Friday’s close, and now testing Friday’s intraday high.
If, then… (notes to accompany the Tour recording)
Friday’s entire session developed entirely in negative territory, gapping down and probing a prior low but not closing under it. That last characteristic puts the “ineffectual” in Ineffectual Pessimism, a setup that can launch a counter-trend bounce. Which the overnight bounce may be foreshadowing, but it still depends on Monday’s open isolating Friday’s session. Otherwise, overnight buying pressure will have been expended without gaining traction for the effort, and could create a rubber band effect that snaps back down to resume last week’s decline.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2674.25 would be likely at least to trigger the 2668.25 bias-up signal at 10:15. Exiting the open above 2681.00 would be likely also to recover the 2677.50 bias-up target at 10:15 to renew the bias-up signal.
Saturday Review’s recording (for 10/27/18)… Something big(ger) this way comes.
The so-called Powell Put faded further this week, despite the shaming efforts of Trump, Kudlow and now also Mulvaney and Kashkari. Recession warnings are rising. FAANGs stocks continued the trend reversals we first warned of with NFLX’s 7/16 plunge, confirmed almost immediately by FB’s 7/26 plunge. “Peak QE” is becoming a more widely recognized theme, rising rates have become widely recognized, period.
Should that list — and the many other items which could be added to it — be held directly responsible for the recent drop? Markets peaked in September, fully 3 months AFTER our NFLX and FB warning shots. So, was ignoring their growing and ongoing risks responsible for stretching the market rubber band until it could only snap down as it has?
It’s essentially the exact pattern we tracked in the S&Ps, my proprietary Complex Ascending Triangle (see image). First identified in March and discussed regularly on Saturdays, it has continued resolving down aggressively as the pattern dictates.
Based on the pattern’s historical tendencies, is the drop done, nearing its end, or still well under way and entering a new phase? How will we spot which, and what are the likely paths? We discuss these questions, and more, in this week’s Saturday Review…
The following stock requests were reviewed in this order:
FTNT, BABA, FB, EBAY, WDC, GE, BAC, OLED, TAP, BIDU, KMI, LNG, TLRY, CGC, ACB(FF), MMNFF, MJ, TGODF, GWPH
transcript
—————– (10/27/2018 08:39) —————–
Rod David: -=-=-=-
Rod David: Welcome to Saturday Review. Please post questions and thoughts as they occur to you.
—————– (10/27/2018 09:31) —————–
ljr iPad: Rod, what’s the best email address to ask questions during the day?
ljr iPad: {post answer here please}
Bill G: gm
David B: Good Morning
ljr iPad: gm
jp: gm
—————– (10/27/2018 09:40) —————–
Mark G: gm
Mark G: is there anything in Thu high DT that requies a retest?
—————– (10/27/2018 09:43) —————–
Adam: do you have yesterday’s aft biases
—————– (10/27/2018 10:03) —————–
Mark G: 2532 low if tested may still produce a significant bounce?
—————– (10/27/2018 10:05) —————–
Mark G: event if the intent is a bear mkt
Mark G: evn if
—————– (10/27/2018 10:08) —————–
Mark G: do we have a down/up crash setup working?
David B: when the market avoids your crash template scenario have you seen where one starts right after that this is a real warning something bigger is happening? Did monday avoid this and possibly a new one could be starting?
—————– (10/27/2018 10:14) —————–
Mark G: 2532
Mark G: not Fri low
Mark G: Feb low I mean
—————– (10/27/2018 10:15) —————–
ljr iPad: stocks (earnings this week): FTNT, BABA, FB, EBAY, OLED, TAP….any levels for positions of strength/weakness will be helpful. need to leave and will watch recording. thanks
ljr iPad: BIDU too.
—————– (10/27/2018 10:19) —————–
David B: Yes that one
—————– (10/27/2018 10:21) —————–
Mark G: yes
—————– (10/27/2018 10:23) —————–
Adam: potential isolation?
—————– (10/27/2018 10:28) —————–
Adam: got it
Mark G: with Oct being a down month for all indexes how do you think window dressing plays out this time as it is likely to find more sellers ?
—————– (10/27/2018 10:30) —————–
Mark G: end of Oct
Mark G: k
—————– (10/27/2018 10:32) —————–
Rod David: re: “best email address to ask questions during the day” … Here in the chaRTroom, of course, or else chaRTroom@roddavid.com
—————– (10/27/2018 10:41) —————–
David B: WDC,GE
—————– (10/27/2018 10:44) —————–
Mark G: BAC
—————– (10/27/2018 11:02) —————–
Mark G: thx much
—————– (10/27/2018 11:11) —————–
Mark G: SIRI
—————– (10/27/2018 11:17) —————–
Mark G: thx
Bill G: thanks
David B: Thanks
Saturday Review Link
Be sure to join us by 9:30am ET for this weekend’s Saturday Review. After discussing the bigger picture and gaming out strategies for playing next week’s likelier opening setups, we’ll do instant analysis of any stock charts that you request… See you there!
Morning Bias
| MON morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2667.75 | 2668.25 |
| …would target | 2677.00 | 2677.50 |
| Bias-down: under | 2647.50 | 2648.00 |
| …would target | 2640.50 | 2641.00 |
| Signal status: BIAS-UP, BIAS-UP TARGET EXCEEDED | . | |
| NEW: 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)
I missed the fun. Especially for a Friday. Already having extended Thursday’s 2707.00 cash session close to greet Globex at 2688.00, overnight action extended down to 2646.00. Bouncing 26 points into and out of the open quickly peaked at 2672.00, then plunged 44 points to 2627.50.
That’s a lot. But not necessarily too much to continue falling further. It didn’t — not for the morning, and not for the day — as the bias environment was exited at 11:30 above its 2647.00 entry. The interim probe was isolated, which tends to hold on Friday mornings. The recovery extended to 2692.00 as the noon hour ended before another drop attacked 2641.00. The morning’s isolation absorbed the drop and the balance of the session firmed.
Friday developed entirely in negative territory, probing a prior low but not closing under it. Ineffectual Pessimism that could launch a counter-trend bounce if Monday’s open can isolate Friday’s session. Otherwise, greeting the new week in decline could resume the decline — and compensate for Friday’s delay.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.