S&P
The First Trade & Pre-open Tour Recording… Pavlov’s dog got loose.
Proper context can start the day with a solid win and make all the difference.
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…
Wednesday’s open was greeted at the overnight range’s upper-end. A choppy, wide overnight range, indicating flip-flopping between polarized opinions. a Tuesday afternoon’s sellers had gained traction, so not gapping up above a prior high would doom to failure any rally attempt. The open did rally, and then the morning, and finally the knee-jerk reaction to the afternoon’s FOMC Minutes, totaling 23 points from the open up to 2747.00. The bias environment exit reversed polarity, apparently delivering quite a shock as the balance of the session plunged 47 points to test the next lower objective down to 2700.00.
Overnight action’s new info…
Extending down to 2693.50 through the futures close initially fell further to 2682.00 through the Globex open. Gradually recovering through the night greeted the Globex opens back at 2693.50. Cautious strength has gotten more daring, now having extended up to 2708.75. That’s back above Tuesday’s late low, and stretching the room for noise around a 61.8% retracement of yesterday’s last downleg (the post-position-squaring window). It’s resistance.
If, then…
Haven’t three consecutive rejected early rallies yet conditioned the market not to rally early? It seems that one of Pavlov’s dogs has gotten loose overnight, but he’s only reached the property’s fencing — resistance being tested by this overnight bounce. This could become an Isolation setup, by greeting Thursday’s open back within yesterday’s range and thereby isolating the probe under its lows to the overnight. Isolation setups tend to be durable reversals. Pavlov’s dog won’t hear the open’s bell if he’s already escaped over the fence. Ending the pullback from last week’s highs, whether to retrace the pullback or to resume the rally, in either case would rally today. Otherwise, not triggering the Isolation setup after fully forming it could be as bearish as the setup would have been bullish.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2709.00would be unlikely to trigger the 2710.25 bias-up signal at 10:15. Exiting the open above 2701.50 would be unlikely to trigger the 2695.00 bias-down signal.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2710.75 | 2710.25 |
| …would target | 2723.00 | 2722.75 |
| Bias-down: under | 2695.25 | 2695.00 |
| …would target | 2683.00 | 2682.50 |
| Signal status: BIAS-UP, BIAS-UP TARGET MET | 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)
Tuesday afternoon’s sellers had gained traction through the bias environment exit and the final hour’s entry. Gapping up enough Wednesday could have invalidated that traction.
Not gapping up enough would reflect weak-handed sponsorship and doom to failure any bounce.
Apparently, no matter how long that might take. We know, because Wednesday morning’s rally held up into the FOMC Minutes, and even extended on a knee-jerk reaction to it. That only exacerbated the rubber band stretch, which snapped back down as the bias environment began lapsing.
The afternoon peak tested its 2646.50 bias-up target by 1 tick while RSIs diverged negatively. Its reaction down collapsed to eventually probe the afternoon’s 2619.00 bias-down target and filled gaps back down to Tuesday’s 2714.00-2715.25 closes before correcting.
The afternoon collapsed again to retest oversold RSIs at Tuesday’s 2705.75 low. The next lower objective at 2701.50 was probed by 8 points down to 2693.50. Unless rejected immediately Thursday, a new downleg is underway. Meanwhile, the third consecutive day of morning rally and afternoon drop has likely conditioned buyers not to buy.
- 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 Mar Contract (EC, ETF: (FXE, UUP))
Tuesday’s gap down had held intraday, but it extended lower overnight to gap down Tuesday and test 1.2320 support. Reaction to the afternoon’s FOMC Minutes surged back up to Tuesday’s highs, still needing to recover 1.2395 to reverse the trend back up.
Gold Apr Contract (GC, ETF: (GLD))
Not holding 1335.00 Tuesday still requires a close back above 1341.00 to launch a recovery leg. Extending the pullback otherwise has no lower objective in-play. Retesting Tuesday’s 1330.00 low held intraday, and reacted up on FOMC Minutes to test 1338.00.
Silver Mar Contract (SI, ETF: (SLV))
Holding 16.40 Tuesday and only testing it overnight allowed Wednesday to hold the pullback limit. But closing any lower would target fresh lows. The intaday bounce back up above 16.60 reacted up sharply on FOMC Minutes and filled the gap back up to Friday’s ~16.75 close.
30-year Treasury Mar Contract (US, ETF: (TLT))
Flat-to-lower into and out Wednesday’s open greeted the afternoon’s FOMC Minutes at the trading range’s 143-14 lower-end, which was still being tested after the event, having no bullish excuse to further delay recovering the 144-12 buy signal.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
The 61.35 bounce limit still being probed at Tuesday’s close was tested as support overnight. The delay in rejecting its recovery makes its actual rejection likely to done aggressively, and any shallower weakness would be more vulnerable to recovery.
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Tuesday’s gap up to test the 2.65 prior high had held, still being likely to probe fresh lows before any credible recovery could begin.
Look ahead: Economic Calendar – for Thu Feb 22, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Thursday’s econ calendar is the week’s busiest, with a combination of high-profile econ reports through the open and Fed speakers into the noon hour. All of which will be viewed through the lens of Wednesday afternoon’s FOMC Minutes.
Neel Kashkari Speaks
WED 8:15 PM ET
Jobless Claims
8:30 AM ET
Bloomberg Consumer Comfort Index
9:45 AM ET
*William Dudley Speaks
10:00 AM ET
*Leading Indicators
10:00 AM ET
EIA Natural Gas Report
10:30 AM ET
Kansas City Fed Manufacturing Index
11:00 AM ET
EIA Petroleum Status Report
11:00 AM ET
*Raphael Bostic Speaks
12:10 PM ET
7-Yr Note Auction
1:00 PM ET
Fed Balance Sheet
4:30 PM ET
Money Supply
4:30 PM ET