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Market Wrap (recording & summary)
Wednesday was greeted by multiple instances of excessive optimism that I detailed in the pre-open Market Tour. None of which would necessarily prevent retesting the 2961.25 overnight high’s “New Globex trend extreme.” But they did. The high was only attacked again intraday to within 5 points. Twice.
Monday’s “unfinished business” above at 2954.25 had been met overnight, but it was also Wednesday’s open. A couple of big downlegs eventually touched 2943.50 at the noon hour’s low — stopping optimistically short of Tuesday’s unfinished business below at 2941.50. Down 20 points from the overnight high, and still showing signs of optimism.
Greeting the FOMC policy statement from just above 2949.50 was likely to extend in that direction, and returned to the morning’s 2956.00 high. Despite probably being only obligatory resistance, it was still resistance. And its test coincided with the Fed Chair’s Q&A, which evoked quite a different sentiment — reacting down 17 points to 2939.00.
A compelling hold-short would have been considered on a close under 2935.00 with the likelihood for gapping down to 2919.50. But the close had dropped already to 2924.50, reversing the odds. Post-close action has already extended down to 2916.00.
A lot can happen overnight. Recovering 2930.00-2934.00 would be big, but a retest of Tuesday night’s highs requires recovering 2949.75-2950.50. If this were Friday, then extending down sharply intraday would be very likely, but it’s at least still possible. There’s room down to 2910.00-2911.00 without yet falling over the edge, but it’s a very difficult level to recover from.
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 Jun Contract (EC, ETF: (FXE, UUP))
Wednesday continued extending higher, probing the 1.1280 “higher prior low” to test the Falling Wedge’s downtrending resistance at 1.1300 up to 1.1310. Backing-and-filling would be normal in the process of forming a more durable bottom. The FOMC reaction started the process, collapsing back down to the Wedge’s 1.1240 lower-end.
Gold Jun Contract (GC, ETF: (GLD))
Gapping down Wednesday between Monday’s close and Tuesday’s gap up remained within Tuesday’s range throughout Wednesday. Spiking up after the close in reaction to the FOMC policy statement attacked the week’s highs up to 1289.00. Reaction to the Fed Chair’s Q&A collapsed back down to and through session lows to test 1280.00.
Silver Jul Contract (SI, ETF: (SLV))
Wednesday gapped back down to and through Tuesday’s 14.83 low, extending to fresh lows at 14.70, before the FOMC policy statement reaction bounced back up to 13.82. That was still under the morning’s lows and Tuesday’s low. Reaction to Powell’s Q&A fell back to 14.70.
30-year Treasury Jun Contract (US, ETF: (TLT))
“Higher prior lows” at 147-22 and the 147-24 gap fill that were tested Friday were retested at Wednesday’s open and probed up to 148-11 ahead of the afternoon’s FOMC events. Holding up through the Policy Statement was retraced during the Q&A, allowing the sell signal to be raised to 147-04.
Crude Oil Jun Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Tuesday’s reaction down from its open’s premature test of the 64.35 buy signal was extended down Wednesday to 62.75, allowing the buy signal to be lowered to 63.75,which was attacked into Wednesday’s close.
Natural Gas Jun Contract (NG, ETF: (UNG, UNL))
Flat-to-lower overnight ranging was recovered in time to gap up Wednesday to and then through Friday and Tuesday’s 2.60-2.61 highs, extending a couple of cents higher to greet Thursday’s EIA from a position of strength.
Mid-day Update… BIAS-DOWN, BIAS-DOWN TARGET MET.
Greeting FOMC from a pullback to support.
The post-open dip to 2947.00 was recovered before noon back up to the morning’s 2955.75 bias-up target. Its reaction trended down to fresh lows through the noon hour and tested this afternoon’s 2944.50 bias-down target by 1 point. Its reaction bounced up to test this afternoon’s 2950.50 bias-down signal by 3 ticks, which held its test.
This is a bias-down environment, and its bias-down target was already met. Its retest is in-play, but won’t become “unfinished business” if left outstanding.
Retesting the bias-down target is less likely with the FOMC events just minutes away and beginning during the bias environment. Greeting FOMC from beyond either end of the 2946.25-2949.50 range would be likely to react in that direction. In between is an unknown “no man’s land”.
Volatility tends to be excessive during FOMC policy statements and Fed Chair Q&As. Be sure to consider that greater degree of unpredictability in position-sizing and execution decisions.
Look ahead: Economic Calendar – for Thu May 2, 2019
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Thursday’s pre-open Claims is high-profile, but usually not influential to price action, although that might be different ahead of Friday’s payrolls. Any noticeable reaction is likely to be duplicated in reaction to the post-open report.
Challenger Job-Cut Report
7:30 AM ET
Jobless Claims
8:30 AM ET
Productivity and Costs
8:30 AM ET
Factory Orders
10:00 AM ET
EIA Natural Gas Report
10:30 AM ET
Afternoon Bias
| WED afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2956.00 | 2957.75 |
| …would target | 2962.25 | 2964.00 |
| Bias-down: under | 2948.50 | 2950.50 |
| …would target | 2942.50 | 2944.50 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET MET | . | |
| 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.