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Post-open Review… Pavlov’s dry cleaners..
No clear path or volatility.
Sunday night’s opening rally to 2477.50 was within Friday’s range. Its gradual retracement overnight was within the opening rally’s range. Sponsorship, such as it is, isn’t attempting anything not produced already. Opening flat could have attracted intraday sponsorship, but didn’t. This is a “dry cleaners morning,” often better spent running errands.
Having said that, holding the open’s test of unchanged does suggest that sellers aren’t retaking control. Potential for probing into negative territory can’t be prevented, but it would likely be recovered.. Meanwhile, probing into negative territory isn’t at all required.
The overnight retracement of its initial rally does reflect some degree of restrained optimism. Especially when the past two weeks are dense with gaps up. Failed gaps up. So, could that be Pavlovian conditioning at work? It was too muted to be sure, but a more obvious downdraft would still be likely. And there’s room under 2472.50 to test the 2467.75 bias-down signal.
The First Trade & Pre-open Tour Recording… Still chipping away at gaps up.
Proper context can start the day with a solid win and make all the difference.
NEW 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…
Rallying overnight ahead of Friday’s Employment Situation report was unusual. Not the ultimate reaction, which found buyers sorely lacking just when needed most — to extend or even to maintain a gap up. The gap did try extending higher, almost creating an anchor that would reliably attract price up to it. But the gap up soon reversed down. I know, shocker. Only a couple of exceptions to reversing gaps up in the past two weeks. This was aggressive, plunging 8-1/2 points during the first half-hour. The balance of the session ranged narrowly sideways.
Overnight action’s new info…
Sunday night’s open soon firmed and eventually recovered to attack Friday’s 2477.75 post-open high. Hovering there into Europe’s opens found no new sponsorship, and Friday’s 2473.75 cash session close has been retraced, attacking Friday’s 2472.50 futures settle.
If, then…
Ongoing ranging just under prior highs suggests that at least an obligatory new high will print. An ongoing range also suggests that the immediate resolution’s direction is unknown, only that it’s likely to be temporary and that its reaction is likely to be more durable. As the range narrows, the initial breakout is getting easier to anticipate. And presumably closer. In fact, Drudge has an entire section of 4-5 headlines devoted to the stock market’s impending collapse, which suggests near-term timing of an upside direction.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2474.00 would be unlikely to trigger this morning’s 2476.25 bias-up signal at 10:15. Exiting the open above 2478.00 would be likely to trigger bias-up.
Phonetic dictation…
good morning good morning and welcome it’s Monday it’s time for Monday’s Morning Market to or we didn’t have a Saturday review wasn’t really a lot to review as just the same story of course the same story eventually becomes quite a different story in the market but that same story is the ongoing series of gaps up Gap up Gap up a little bit little bit more skip a day Gabba Gabba actually flat butt at the upper end of range cab up and in each case react down not extend higher and then some of these several of these including Friday pretty aggressively react down and so in addition to which you know we’ve had a two week. Quite a few closes just under 2475 around 2474 with very few exceptions to these three these two still right around the range noise around the range in other words nothing happening and as is the case or what tends to happen in a market that is dull and listless is that it resolves of course everything was always eventually it wouldn’t resolves it tends to resolve One Direction and then reverse more substantial in the opposite direction this happens to be a high back on the 27th so Thursday and a half ago and hovering at highs or just under High’s pessimistically short basically ineffectually optimistic holding up without doing anything that by the way tends to have its own resolution at obligatory high now we could have we could have extended down within a few days or a couple of days rejecting a fresh on ice and stead as in happened within a few days or a couple days few days after that it is so couple days few days been working just isn’t finding sellers here it’s going to have to go higher to find them and by the same token it’s not really finding strong-headed sponsorship this is not accumulation it may resolve up and may resolve up initially but it probably finds a pretty good reaction down when it does if it reacts David resolves down first it probably find support for a better balance again back to Fresh highs but we don’t have a pattern in here that he had suggest the rally is going to extend so as for last night no new Clues I don’t have to be if it would shock you to know that we rallied back to the high in fact the only thing shocking here is not that we were indicated to gap opening hours earlier this is not at all reliable for for the opening range but the potential to Gap up is Ben retraced that’s been raised to 7375 that was Friday’s Cashing close Futures with 7250 not reversing in the negative territory and Fridays Gap up itself which followed a head of the employment situation report and did try to probe higher almost creating an anchor there I did try to on Friday that isthis has been the upper end of the range so everyday is an opportunity every open is an opportunity to resume the wrapping up and be the most likely way to get it done or just gradually firm or whatever throughout the day and the last time I went in last 60 to 90 minutes which are not affected by the prior session so in other words because buyers and sellers both failed to gain traction Friday trending today needs to begin by gapping so gapping up camping down Beyond other end of the Friday’s range the open doesn’t Gap then the next opportunity to Rally or decline be on the Range is the last 60 to 90 minutes of the day so if today isn’t going to reject the Gap up and reverse down the session until the last 60 90 minutes could be spent firming 2 proximity just to be in position for the last 60 to 90 minutes to break her will see nothing is indicated at this time as far as which 279 at would have triggered a reaction up did eventually 279 didn’t really react up substantially because it had completed the testing that to avoid a deeper dropping andcouple of sleeper Lowe’s in here they’re basically gaps that could hold could launch recovery account otherwise get food that support and there’s not much other support below silver as well no real asleep or Lowe’s and silver but 1590 1580 potential support just as a correction long bond which stopped just sick stick short with Friday’s blip up on the employment situation report from Thursday’s close just under the target area just hat the prior High seems like it’s really being rejected quickly that pessimism is creepy and it does look that’s a mistake when you rally this far and this much and that that sustainable and I should say that high but it really did set in pretty quickly the highs weren’t really relished barely pierced the prior High so I’m suspicious that the reversal dad is actually going to reverse that we’re not X not going to actually test the high Friday’s high before any kind of reversal if it is a reversal can set it crude oil flat to lower Silesia closer to 4825 or reverse the trend and natural gas when on Friday or before Friday is open satisfy Mondays or Tuesdays love that is but .
Morning Bias
| MON morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2478.75 | 2476.25 |
| …would target | 2484.50 | 2482.00 |
| Bias-down: under | 2470.25 | 2467.75 |
| …would target | 2465.25 | 2462.75 |
| Signal status: NO-BIAS | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
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)
Has the market evolved beyond Pavlov? It keeps gapping up — to the same area, mind you — and then reversing down. Not every day, but most days this week, and most days of the past two weeks. Oh, and the reversals down never extend. They’ve been contained by a series of higher lows with only two exceptions, one being a headline reaction.
Perhaps Pavlov is alive and well… in the Dow. Not the proverbial Dogs of the Dow, far from it. The average has been rallying relentless and substantially during the same period. Although NDX has been flat-to-lower (more flat than lower), the Dow’s outperformance isn’t exactly rotation out of risk. It’s more like becoming the risky index.
Meanwhile, S&Ps are ranging flat-to-higher (more flat than higher) just under the high. Extending down should have happened by new if a new high were going to be avoided. Immediately breaking lower could extend but I would be suspicious. At least some fresh high is likely regardless of the eventual resolution.
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 Sep Contract (EC, ETF: (FXE, UUP))
Initially bouncing Friday stopped short again of fulfilling potential to 1.1945-1.1970 before reacting down aggressively. Closing lower Monday would not be capable of signaling a trend change, but a weak bounce Monday would be very vulnerable to signaling a trend change on Tuesday.
Gold Dec Contract (GC, ETF: (GLD))
Dropping back down to 1270.00 Thursday after bouncing from it Wednesday chipped away at the last support offered there. Friday plunged to test the next objective at 1271.00. Recovering 1272.00 would suggest a bigger bounce underway, but must recover 1285.00 to suggest something other than just more topping. Near-term attraction to gaps below indicate a bearish resolution regardless of the path there.
Silver Sep Contract (SI, ETF: (SLV))
Returning back down to 16.60 support already had indicated its eventual break, which was fulfilled by Friday’s plunge to 16.20. Immediate strength coming out of the weekend could be productive Monday morning, but still probably only temporary before at least retesting Friday’s lows.
30-year Treasury Sep Contract (US, ETF: (TLT))
Gapping up Friday extended higher momentarily, but long enough to attack the outstanding 155-16 target to within 6 ticks. Reacting down sharply filled the gap back down to Thursday’s close around 154-04 that has defined prior highs. There is no requirement to retest the high, or to fulfill the entire target, but it remains the likelier resolution.
Crude Oil Sep Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Ranging persisted Friday above the 48.25 sell signal, and under the 50.10 target that has been met already. Closing beyond either would be likely to extend in that direction.
Natural Gas Sep Contract (NG, ETF: (UNG, UNL))
Tuesday’s 2.76 low had required a retest. Thursday night’s drop pierced it, but Friday only attacked it repeatedly. The “ineffectual optimism” still suggests a fresh low is required, regardless of the ultimate resolution.