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Market Wrap (recording & summary)
Wednesday night’s drop to 2913.25 had recovered to greet Thursday’s open at 2924.00,. The open slid back under 2919.00 to prove the pre-open bounce wasn’t attracting reinforcements. That did not, in itself, point any lower. It only created the vulnerability to other influences pointing lower.
And those other bearish influences did not, in themselves point lower so quickly. Downside projections of 2901.00 and 2896.00 had no particular timing requirement. Meeting them so quickly (and the afternoon’s 2888.00 renewed bias-down target) only creates other vulnerabilities.
Price action was at least momentarily responsive to the relevant levels of 2901.00, 2894.00 and 2888.00, bouncing to 2905.00 into the final hour. Closing back above them suggests that selling pressure was fulfilled. Friday morning selling pressure would be the product of new sponsorship. And new sponsorship is vulnerable to being trapped.
So, a knee-jerk negative reaction to Friday’s payrolls report must still break a new relevant level to reflect strong-handed sponsorship. Which is entirely possible, and then entirely vulnerable to resuming the decline into the weekend. Absorbing an initially negative knee-jerk reaction could instead find Friday Factors triggering the short-squeeze that Thursday afternoon’s bounce tried to be.
Higher highs into the close up to 2908.00.50 recovered all of the relevant downside levels. The 2-week old 2907.50 prior low was still being tested, so we can’t be assured momentum had reversed up. The pattern remains vulnerable to a bearish reaction on Friday’s pre-open report, and to extending its bias through the noon hour.
Details and other markets coverage are discussed in the post-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 Dec Contract (EC, ETF: (FXE, UUP))
Gapping down to a fresh low on Thursday at 1.1560 was well above the 1.1526 overnight low. Its recovery probed positive territory up to 1.1606 before dipping back into negative territory. Back above 1.1595 would now trigger at least a corrective rally up to 1.1740. The trend otherwise remains down.
Gold Dec Contract (GC, ETF: (GLD))
Closing at or under 1203.30 Wednesday was recovered Thursday morning to test the 1209.50 bounce limit. It was retraced entirely back down under 1203.30. Closing under the original 1201.50 sell signal should resume the decline targeting 1172.50.
Silver Dec Contract (SI, ETF: (SLV))
Dipping overnight under the 14.65 pullback limit was recovered Thursday morning to test the 14.80 gap fill. Its resistance resolved down to fresh lows at the original 14.56 gap fill, and under the 14.65 pullback limit. Closing any lower would resume the decline.
30-year Treasury Dec Contract (US, ETF: (TLT))
Extending lower overnight gapped down Thursday. The entire session ranged sideways in negative territory. Its second consecutive lower close confirmed Wednesday’s breakout from what had been a multi-session range, which now requires at least an eventual third lower close.
Crude Oil Nov Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Gapping down to and through 76.00 Thursday extended sharply lower to touch the 73.90 sell signal. Just closing under the 75.45 pullback limit requires its immediate recovery Friday to resume the upside momentum.
Natural Gas Nov Contract (NG, ETF: (UNG, UNL))
Room for a pullback down to 3.11 was attacked by Thursday’s morning’s drop from 3.25 in reaction to EIA. It was greeted from a position of strength, so the pullback should be recovered at least to retest the high.
Mid-day Update… Relentless.
Another bias-down renewed.
Entering the noon hour at fresh lows quickly extended down to touch the minimum objective for this entire downleg at 2901.00. That’s also this afternoon’s bias-down signal, and its reaction up to 2905.00 quickly failed. Fresh lows barely pierced this afternoon’s 2894.00 bias-down target.
Another bounce attacked 2905.00, which failed again, and returned to 2894.00, again. This time, lower, in time to renew the afternoon’s bias-down signal, next targeting 2888.00.
RSIs are diverging positively into new session lows at 2890.50. Its the second positive divergence, so probing lower without first bouncing above the setup’s 2896.25 interim high would become vulnerable to essentially doubling today’s drop.
There’s otherwise no requirement to extend lower today. Meanwhile, exiting the bias environment back above 2901.00, or recovering 2905.00 into the final hour, would be the nearest signal that the decline had ended.
Look ahead: Economic Calendar – for Fri Oct 5, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Friday’s highlight is almost its only report, which is monthly payrolls released before the open. The noon hour’s Fed speaker can be influential to price action, and more reliably when following high-profile data.
*Employment Situation
8:30 AM ET
International Trade
8:30 AM ET
*Raphael Bostic Speaks
12:30 PM ET
Baker-Hughes Rig Count
1:00 PM ET
Consumer Credit
3:00 PM ET
Afternoon Bias
| THU afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2906.75 | 2911.00 |
| …would target | 2913.75 | 2918.00 |
| Bias-down: under | 2896.75 | 2901.00 |
| …would target | 2889.75 | 2894.00 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET EXCEEDED | . | |
| NEW: BIAS VIDEOS… INTRO // EXAMPLE | ||
1. At 1:20, 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 1:20 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 1:20 would invoke a grace period through 1:30 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 1:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.