S&P
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))
Wednesday’s blip-down to 1.0915 had reacted up sharply intraday, but that didn’t prevent Thursday’s open from gapping down to fresh lows and attacking 1.0825, targeting 1.0750-1.0785.
Gold Feb Contract (GC, ETF: (GLD))
Suspicion about Wednesday’s close above the 1070.00 buy signal proved out overnight by erasing the intraday gain and opening Thursday back at 1057.20-1061.50 support. This latest test inflected down instead of up, probing fresh lows under 1047.00. The next lower support is 1038.50-1041.00, but closing back above 1061.50 would launch a new rally leg.
Silver Mar Contract (SI, ETF: (SLV))
Wednesday’s bounce above 14.10 attacked 14.35, but that didn’t neutralize its requirement for a third lower close. Thursday’s gap down to retest 13.70 support provided the lower close, and filled the outstanding gap back to Tuesday’s close. But a close above 14.10 is needed to signal momentum reversing up.
30-year Treasury Jan Contract (US, ETF: (TLT))
Wednesday’s bounce extended higher overnight to fulfill the 155-29 corrective bounce target. It wasn’t retested intraday, which hovered, suggesting that 155-29 would be retested before a downleg would be credible.
Crude Oil Jan Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Sunday night’s 34.50 low was attacked to within 10-15 cents Thursday, early enough that delaying its test suggests “ineffectual optimism.” Rather than to form a bottom from retesting the low, delaying its retest much longer could extend the downleg.
Natural Gas Jan Contract (NG, ETF: (UNG, UNL))
The premature bounce to 1.85 resistance proved it was “ineffectual optimism” ahead of Thurdsay’s EIA report, which triggered a reversal down to test 1.77, still targeting 1.71 and possibly 1.67.
Mid-day Update… Down with down!
Today’s market Wrap is one hour early at 2:55 ET.
[I’m away from the screens for the last hour, following the Wrap.]
The inverted morning-long rally (I’m sure there’s a simpler name for that) extended down through the bias environment’s exit. From the 2072.75 overnight high to the 2069.25 open, down to the 2038.25 low, a lot of selling pressure was expended.
And S&Ps are still above yesterday’s prior low.
After two days of stiff upper-lip into the widely-telegraphed historic rate hike, which prompted a surge — all ahead of quadruple witch expiration — a pullback can be dismissed. Pulling back under any conditions without actually signaling the rally was inverting could not have been dismissed.
So, while this afternoon is a no-bias environment, this, too, shall lapse.
If price action continues hovering at or under the 2050.50 bias-up signal, then trending up out of the bias environment would be entirely credible for extending higher through the close. Exiting the bias environment in decline would still have room down to Tuesday’s 2030.00 low before suggesting the trend may be reversing down.
Look ahead: Economic Calendar – for Fri Dec 18, 2015
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Friday’s econ reports have little track record of influencing price action. Atlanta Fed is getting there. But this being expiration — quarterly quadruple witch, no less — is one big wild card both for the open, and for reaction to the noon hour’s Fed speaker.
*Quadruple Witching
PMI Services Flash
9:45 AM ET
Atlanta Fed Business Inflation Expectations
10:00 AM ET
Kansas City Fed Manufacturing Index
11:00 AM ET
*Jeffrey Lacker Speaks
12:30 PM ET
Baker-Hughes Rig Count
1:00 PM ET
Afternoon Bias
| THU afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2059.50 | 2050.50 |
| …would target | 2066.00 | 2057.00 |
| Bias-down: under | 2051.25 | 2042.25 |
| …would target | 2044.00 | 2035.00 |
| 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… Sunny side down.
Rally setup signals inversion, and inverts.
Yesterday afternoon’s buyers had gained traction for their efforts, making this morning likely to trend up. The setup is always vulnerable to inverting — to signaling the opposite — in this case, by trending down through the open.
The open trended down.
The open trended down, after a pre-open bounce had retraced a healthy 61.8% of the pre-open drop. Sellers were refueled, and they exploited the opportunity.
The 2069.25 opening print, which is also this morning’s bias-up signal, immediately reversed down. The 2057.75 bias-down signal was soon tested. Ranging sideways around it through 10:15 invoked the grace period, but the decline resumed down to the 2050.50 bias-down target.
That might have been an attractive buying opportunity — fulfilling the downside target, especially while RSIs diverged positively, which they were doing. But the inverted morning rally signal suggested otherwise. Now an extra downleg has touched 2043.25, its reaction up testing 2049.00.