S&P
Pre-close View… Holiday drift.
Columbus Day hasn’t discovered new sponsorship.
Rallying overnight and gapping up to the renewed bias-up target may have scared away new sponsorship. It certainly hasn’t attracted any. Neither buyers, nor sellers, as the reaction down held the afternoon’s bias-down signal in a no-bias environment. And the range has only narrowed since the bias environment started lapsing.
And there’s no sign of that changing today. There’s certainly no such requirement.
Hovering at or just above last week’s highs into the close won’t produce a decisive break higher — not like the open’s gap up had suggested. And that wouldn’t confirm what the open’s gap up had suggested.
But a target was just met at the afternoon’s 2156.50 low, and the position-squaring window has opened. Surging through 2158.75 would be credible for extending higher into the close.
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 Monday without Friday’s range extended down intraday to attack Friday’s lows. The inside day must be rejected without delay Tuesday to avoid extending the decline much more obviously.
Gold Dec Contract (GC, ETF: (GLD))
Monday’s gap up only ranged narrowly within Friday’s range instead of extending higher above 1266.00, and instead of filling the gap back down to Friday’s 1255.70 close. The timing is still appropriate for some sort of rally, be it a temporary correction or a durable recovery. But even the most bullish scenario can’t dismiss the potential for one more probe of fresh lows.
Silver Dec Contract (SI, ETF: (SLV))
Gapping up Monday didn’t extend before settling into a narrow range around Friday’s 17.69 high. The gap back down to Friday’s 17.41 close should be filled before a recovery would be credible — preferably by probing a fresh low intraday and then recovering to close in positive territory.
30-year Treasury Dec Contract (US, ETF: (TLT))
Not recovering 165-30 Friday and only overlapping 165-02 made the decline likely to extend down Monday, which it did, probing fresh lows down to 163-21. Closing under 164-08 makes the decline likely to extend further.
Crude Oil Nov Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Sunday night’s brief dip attacked the 49.00 pullback limit to within 15 cents before recovering to indicate a gap up Monday. The 51.50 target was probed by a dime before reacting down temporarily. The pullback limit has been raised to 50.80, which would maintain the next potential objective at 54.60.
Natural Gas Nov Contract (NG, ETF: (UNG, UNL))
Monday extended higher to fulfill its 3.28 target Monday morning. Its reaction down to 3.24 was largely recovered. But RSIs diverged negatively, suggesting that a pullback or consolidation of some sort may now begin. The rally will be able to resume so long as 3.20 holds as support.
Look ahead: Economic Calendar – for Tue Oct 11, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: The quarterly earnings onslaught gets underway officially after Tuesday’s close when Alcoa (AA) reports. As if that’s not enough to inhibit the afternoon’s volatility, attendance will shrink as participants observing Yom Kippur leave early for services as the holiday begins at sundown.
NFIB Small Business Optimism Index
6:00 AM ET
Redbook
8:55 AM ET
4-Week, 3-Month, 1-Year Bill Auctions
11:30 AM ET
Afternoon Bias
| MON afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2171.00 | 2164.75 |
| …would target | 2176.75 | 2169.75 |
| Bias-down: under | 2164.00 | 2158.00 |
| …would target | 2159.25 | 2153.00 |
| Signal status: NO-BIAS, TESTED BIAS-DOWN SIGNAL | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
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.
Post-open Review… Anchored.
Gap up above prior highs maintained through open.
Gapping up to 2158.00 was at or above each of last week’s intraday highs. Post-open action hardly looked back while extending to 2163.50. That’s even above Friday’s pre-open reaction to the Employment Situation report.
Maintaining a gap up above prior highs is an anchor. It’s not assured of extending higher this morning but often does. Reacting down would be very likely to recover entirely.
Potential for reacting down comes from having extended so far already. Not arbitrarily, but holding a test of the 2162.25 renewed bias-up signal. Exceeding it through 10:15 would have doubly-renewed the bias-up, and still have been vulnerable to a pullback.
Overbought RSIs at the high require its retest, even after a 2-point dip was recovered to within 1 tick. Regardless, back under 2160.75 would suggest a deeper pullback underway this morning. Exiting the bias environment at 11:30 under the 2156.50 bias-up target is the minimum requirement to suggest the day’s momentum is reversing down.