S&P
Market Wrap (recording & summary)
Monday’s opening sell signal hadn’t finished its business that morning, making it likely to extend into Tuesday morning. Which it did, trending down early overnight and extending lower before the open. Tuesday morning’s low did react up substantially, but mostly only temporarily. The balance of the session ranged choppily sideways through the close, just above the morning’s lows.
A couple of things happened Tuesday, and a couple didn’t.
What did happen is a new sentiment or pattern of gapping up into Friday’s new high session and gapping down into Tuesday’s retracement through that last upleg’s origin. The paradigm shift is sudden and relevant, closing under support — similar to January’s two prior big down days. But what didn’t happen Tuesday is the broken support being within proximity of Wednesday gapping up immediately above it to reject Tuesday’s break. but too far below to be recovered immediately by a gap up tomorrow.
Tuesday’s other development was the multiple downtrending sessions, also a new characteristic. This didn’t happen during January’s rally, which has stretched the rubber band. That rubber band didn’t snap back up in the afternoon, perhaps inhibited by a stream of high-profile post-close earnings due, and/or the evening’s State of the Union address, if not also the next morning’s ADP employment number.
Isolating fresh lows to the overnight is the only reliable recovery pattern that would be signaled immediately. Meanwhile, overnight lower lows not recovered through the open would be vulnerable to melting down into the afternoon.
- Details and other markets coverage are discussed in the post-market Wrap recording here.
- Monitor overnight Globex trading in the chaRTroom here.
Mid-day Update… Last bite at this apple.
Trying to reject bias-down.
This morning’s recovery from 2818.50 made it to 2837.00 before the bias environment began lapsing. The recovery was retraced down to 2820.50, triggering the afternoon’s bias-down. But the afternoon’s behavior doesn’t seem to know it — A 12-point bounce is testing 2832.00.
The bounce may be only a correction. Of course, this is a very bearish chart point to be expending weak-handed buying pressure. Stretching the rubber band could snap back down very hard this afternoon, to 2805.00 and 2893.00.
This afternoon’s 2819.00 bias-down target is now “unfinished business below.” It can remain outstanding while the bounce extends into a rally. But back under 2824.50 would start to signal the rubber band is snapping back down.
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))
1.2475 resistance was probed into through Tuesday’s open and held a test of Friday’s high before reversing back down to unchanged. Just closing back under Friday’s range indicates the bounce was weak-handed, still needing confirmation of following through to the downside.
Gold Apr Contract (GC, ETF: (GLD))
[Rolling coverage forward to Apr, which trades at about a $5 premium to Feb]… Bouncing Tuesday tested the 1350.50 bounce limit which reacted down to probe under Monday’s low and to retest the 1340.00 area “lower prior highs” whose test on Monday had triggered the interim bounce. Sellers gained no traction for their effort.
Silver Mar Contract (SI, ETF: (SLV))
Gapping up Tuesday probed higher only briefly before its test of 17.30 resistance had pushed back down to retest Monday’s low. The gap back down to Monday’s close is filled, which doesn’t equate to being a buy signal, but would be constructive to another rally attempt succeeding.
30-year Treasury Mar Contract (US, ETF: (TLT))
Tuesday’s open didn’t gap down as Monday’s “ineffectually optimistic” pattern usually resolves, but the trend remained down as fresh lows were probed into the afternoon. Wednesday’s FOMC policy statement is being greeted from a position of weakness.
Crude Oil Mar Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Monday’s bounce off of 64.95 support was recovered only back above last Thu-Fri low, but did not reverse momentum up. Dipping into Tuesday’s open extended down to test critical support at 64.20. Back above 64.95 would resume the rally.
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Gapping up and ranging sideways throughout Tuesday still produced a higher close, which fulfills the minimum requirement for last week’s confirmed breakout. Meanwhile, the session may have formed an Island, a pattern that can reverse down but only temporarily.
Look ahead: Economic Calendar – for Wed Jan 31, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Tuesday night’s State of the Union address may contain spending plans and saber-rattling that influence overnight price action. But Wednesday’s price action should be more influenced by the pre-open ADP numbers that help to fine-tune our expectations for Friday’s payrolls reaction. Also, any obvious reaction to pre-open reports is likely to be repeated by post-open reports. And the PMI has a reliable track record for influencing price action — both its private institutional release and subsequent public release. Volatility could contract considerably while awaiting the afternoon’s FOMC policy statement, which is very reliable for influencing price action through the close. That duration of influence will abut an otherwise normal consolidation ahead of high-profile (but otherwise not influential) post-close earnings coming from T, BA, MSFT and FB.
MBA Mortgage Applications
7:00 AM ET
*ADP Employment Report
8:15 AM ET
Employment Cost Index
8:30 AM ET
Treasury Refunding Announcement
8:30 AM ET
*Chicago PMI
9:45 AM ET
Pending Home Sales Index
10:00 AM ET
EIA Petroleum Status Report
10:30 AM ET
*FOMC Meeting Announcement
2:00 PM ET
Afternoon Bias
| TUE afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2840.25 | 2841.00 |
| …would target | 2845.75 | 2846.50 |
| Bias-down: under | 2824.75 | 2825.50 |
| …would target | 2818.25 | 2819.00 |
| Signal status: BIAS-DOWN | FAQ | |
| NEW! Flowcharts: Bias-UP // Bias-DN INTRO VIDEOS #1 and #2 |
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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.