S&P
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2725.25 | 2725.25 |
| …would target | 2730.50 | 2730.50 |
| Bias-down: under | 2714.75 | 2715.00 |
| …would target | 2707.75 | 2708.00 |
| Signal status: LATE NO-BIAS, TESTED BIAS-DOWN SIGNAL | FAQ | |
| Flowcharts: Bias-UP // Bias-DN 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)
All but one of Thursday’s signals attracted reinforcements to exceed their 3-4 minute initial extremes. The exception was the post-open 7-point plunge that probed overnight lows down to 2713.50. Too much, too soon — and during the wrong timing window — to attract reinforcements. The trapped shorts were squeezed back up.
This began a session that offered multiple more instances of weak-handed buying. Their impatience was revealed in temporary steep slopes and ill-timed tests of resistance. The jury is still out on one possible instance of weak-handed selling.
First, a sampling of weak-handed buyers. Holding a test of the morning’s bias-down signal already neutralized upside momentum by fulfilling its offsetting test of the 2725.75 bias-up signal in time to trigger it, but not.
The unlikely morning rally that would be doomed to failure if tried, which tried to its fullest potential at 2732.00, and failed. Intraday tests of downtrending pivotal resistance (see the chart and video) that produced peaks.
Weak-handed selling is possible in the afternoon’s no-bias trending under the 2721.50 bias-down signal. It was doomed to failure like the morning’s extended rally, unless the 2715.00 bias-down target maintained a break. And it broke, with 4 points of buffer down to 2711.00, but was still recovered. The recovery neutralized its attraction above at the bias-down signal retracement, but no more. No reward for the recovery, so no resolution yet.
Meanwhile, Monday afternoon’s prior high held its test Thursday, after Wednesday peaked upon testing the “lower prior highs” of its structure. Reversing down to the interim low held, so I can’t yet say that the bounce’s failure reversed the trend down. And might not say it all, unless and until 2717.25 and 2711.00 break lower.
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’s confirmation of Tuesday’s breakout still requires an eventual third lower close before bottoming would be credible for reversing up. Thursday’s narrowly ranging “inside day” isn’t itself predictive, but closing above its 1.1862 upper-end after first probing a fresh low under 1.1790 would signal momentum reversing up.
Gold Jun Contract (GC, ETF: (GLD))
Greeting Thursday’s open after piercing fresh lows overnight didn’t find sponsorship intraday, which developed entirely within Wednesday’s range. The “inside day” isn’t itself predictive. But closing above its 1291.50 upper-end — especially if after retesting Wednesday night’s low — would signal momentum reversing up.
Silver Jul Contract (SI, ETF: (SLV))
Firming after Wednesday’s close had tested the 16.45 bounce limit, which extended higher intraday to test 16.50. Not yet resuming the decline at this stage suggests that a bigger or longer-lasting detour is underway. Having just done that, I’m suspicious of there being sponsorship to do it again now. Back under 16.40 would signal the decline had resumed.
30-year Treasury Jun Contract (US, ETF: (TLT))
Having confirmed the breakout requiring at least an eventual third lower close, and already having avoided fulfilling it Wednesday, firming overnight was likely to fail. In fact, Thursday’s open gapped down and trended lower to fresh lows at 140-12 to fulfill the minimum objective. The trend remains down so long as 141-04 isn’t recovered.
Crude Oil Jul Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Vulnerability to a deep detour below was negated by Thursday’s gap up above the recent extended range. Reversing down now would no longer be only a temporary detour. Meanwhile, gapping up above all prior highs now creates another attraction above at 72.06 to help recover from a dip. Speaking of which, Thursday’s gap up retraced back into the prior range to 71.10, and has room to test 70.85 before suggesting momentum is reversing down anyway.
Natural Gas Jun Contract (NG, ETF: (UNG, UNL))
Wednesday’s dip had stopped short of 2.78 to avoid greeting Thursday’s EIA report from a position of weakness. It was touched by the news’ initially negative knee-jerk reaction, which snapped back up sharply into positive territory. The gap back to Tuesday’s 2.86 open was filled, and held, to avoid signaling a new upleg is necessarily underway.
Mid-day Update… Stretched.
Weak-handed rally corrected, not yet reversed.
This morning’s 2725.75 bias-up signal held a clean test to trigger no-bias. It broke later up to 2732.00, requiring its retracement. Which the noon hour did, down to 2720.50. This afternoon’s 2721.50 bias-down signal avoided triggering. So, this is a no-bias environment, with no objective in-play.
But the 2721.50 bias-down signal is still an influence. It should define this window’s lower-end.
This morning’s bias-up signal was supposed to do that, and did, ultimately. Just hovering above or around the bias-down signal until the bias environment lapses would be likely to break lower then. But bounces must recover 2726.00 to even begin suggesting a bigger bounce may be underway.
Meanwhile, the bigger picture continues playing out. Rallying prematurely this morning has failed, retraced totally to unchanged. A late afternoon rally would be credible, but not until it starts developing. There’s no requirement to trend again today, so beware of false starts.
Look ahead: Economic Calendar – for Fri May 18, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: An unusual expiration with no econ reports. Not even one, high-profile or influential. The Fed speakers are done before the open, so the session should be pliant to the WedEX signal.
Loretta Mester Speaks
3:00 AM ET
Robert Kaplan Speaks
9:15 AM ET
Lael Brainard Speaks
9:15 AM ET
Baker-Hughes Rig Count
1:00 PM ET