S&P
Post-open Review… Laying the groundwork.
Holding support before this afternoon’s WedEX.
Yesterday’s 2336.75 low had been attacked to within 1 tick overnight. It was pierced by 1 point before the open. It was touched only two minutes before the open, and held.
That’s just noise, and not stretching the rubber band so it can snap back up. Its reaction was likely only to test 2343.00. Attacking it to within 1 tick was reversed to touch the 2339.75 bias-down signal. And only touch it.
No-bias triggered cleanly, putting into play an offsetting test of the 2348.25 bias-up signal. Already piercing a fresh high up to 2343.25 after 10:15, invalidating the upside objective is possible only by exiting the bias environment under the 2337.25 pre-10:15 low.
Nothing requires recovering this morning. But if not yet rallying through the noon hour, then the bullish WedEX would have little excuse not to rally into the weekend.
The First Trade & Pre-open Tour Recording…
Proper context can start the day with a solid win and make all the difference.
NEW 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
In this morning’s pre-market Tour, I listed the incorrect econ reports for today. They are post-open, and only LEI is both high-profile and has a track record of influencing price action.
…Rod
Through the prior close…
Thursday’s backing-and-filling was likely after having surged for five consecutive sessions since a breakout, and then entrenching the trend with a bullish WedEX. Drifting overnight still greeted the 2348.00 open up 5 ticks from Wednesday’s cash session close, and then surged 2 points. Sliding down to 2336.75 probed under the morning’s bias-down signal and also neutralized “unfinished business below” from Wednesday. The balance of the session bounced choppily up to 2347.25.
Overnight action’s new info…
Initially dipping to 2343.00 was recovered entirely up to 2347.50. But only momentarily before giving it all back, and greeting Europe’s opens back down at 2343.00. And that was only momentary, too, as price soon broke sharply lower to within 1 tick of Thursday’s 2336.75 low. Its reaction has bounced to test 2341.00.
If, then…
Wednesday’s rally had gained traction for its efforts, which wasn’t invalidated, so it should still be fulfilled by probing higher. The bullish WedEX also suggests probing higher, or at least recovering from any dip. The first influence should inhibit a durable drop, and the second influence should facilitate firming or rising through the afternoon. Neither of which prevents the morning from consolidating, if not also backing-and-filling to lower levels.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2342.00 would be unlikely to trigger the 2339.75 bias-down signal at 10:15. Exiting the open under 2338.00 would be likely to trigger bias-down.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2350.00 | 2348.25 |
| …would target | 2355.75 | 2354.00 |
| Bias-down: under | 2341.25 | 2339.75 |
| …would target | 2335.00 | 2333.25 |
| Signal status: NO-BIAS, TESTED BIAS-DOWN SIGNAL | FAQ | |
| 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)
Did President Trump just warn us of the rally’s top?
Here’s his tweet from this morning:
Stock market hits new high with longest winning streak in decades. Great level of confidence and optimism – even before tax plan rollout!
I bolded the last fragment for emphasis, “even before tax plan rollout“. The six-day old breakout of this rally was triggered in part by remarks promoting a “tremendous” tax plan. Wednesday morning’s opening dip was rescued by an off-the-cuff remark reminding us of the “massive” tax plan in the works.
Clearly, a tax plan can be wholly imagined and have quite an effect on prices. The rally is sparked by market participants believing a tax plan is coming, and that it will be tremendous and/or massive, having a future positive impact for companies and for their stock prices.As the President said tweeted this morning, even before tax plan rollout!
So, this hasn’t actually been the tax cut rally. It is the anticipation for tax cuts rally.
Several other potentially bullish inputs are also helping to push prices higher. But at some point, potential future developments become priced into stocks. There’s always a discount for risk, and for the time value of money. Or, there should be a discount. Occasionally even that discount is overtaken when a move becomes so high-profile that it attracts many non-professionals.
Non-professionals don’t buy the earliest stage of a move because they’re not yet convinced. Inversely, the more convincing a move becomes, the more non-professional buyers it attracts. Therefore, no price is too high to non-professionals that only now are buying into what is a very convincing move — the more convincing, the more that it’s worth.
It’s a wonder how rallies ever stop. Oh, right. Meanwhile, professionals are focused on those disappearing discounts. They stop buying. Then they start selling.
Now, my own work on this rally continues to suggest it has some more room to advance. The broad base that launched the rally rarely produces only one-legged breakouts. And this first upleg’s degree and duration is usually followed by a second.
But between those first and second uplegs is a correction. A correction can begin in this pattern at almost any time, albeit much more credibly after this weekend than before it. Immediately preceding the first upleg’s corrective drop tends to be wide agreement of the story behind the rally.
Not necessarily the entire story. Non-professionals don’t understand the impact of this week’s Yellen testimony, and expiration, and seasonal bullishness ahead of the three-day holiday. So they also don’t understand that these influences are all within hours of disappearing. And non-professionals also didn’t notice the past 2-3 sessions have ended with short-squeezes. Contrarians did.
Regardless of whether this week’s bullish WedEX signal is fulfilled going into the weekend and coming out of it, another upleg remains likely. But this first upleg is exhibiting characteristics that suggests it reflects a tremendous, massive tax plan, which isn’t even close to being rolled out.
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))
Despite initially extending lower after gaping down under its 1.0570 target, Wednesday bounced back into positive territory. Now despite having held its 1.0605 bounce limit through Wednesday’s close, Thursday gapped up to the 1.0645 prior target. And extended higher to 1.0695 resistance. Which is all a little quick to be durable, so a dip back down to 1.0560 is likely.
Gold Apr Contract (GC, ETF: (GLD))
Gapping up Thursday above the prior recent rally peaks at 1236.00 extended to test the 1242.00 minimum objective and attack 1244.00. A second consecutive higher close Friday would signal that the bounce’s delay will be compensated for by extending to 1259.00.
Silver Mar Contract (SI, ETF: (SLV))
Thursday’s gap up extended to within a nickel of the 18.18 objective, whose recovery through the close would next target 18.72.
30-year Treasury Mar Contract (US, ETF: (TLT))
Firming Thursday morning probed the adjusted 150-14 bounce limit as well as the previous 150-26 bounce limit, attacking 151-11. The bounce developed from Wednesday’s test of February’s prior lows, so it is likely only obligatory and temporary. And rejecting a single day’s probe above the bounce limit(s) by reversing down sharply Friday can reinstate the decline’s momentum.
Crude Oil Mar Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
The 52.55-53.55 range persisted Thursday, once again dipping only to 52.75. The range’s upper-end was also tested, continuing to chip away at both resistance and support in the same session to suggest that a break either way is nearing.
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Thursday’s EIA report was greeted from a position of strength to the extent that the decline’s 2.91 target had been met, and held, and reacted to. But only briefly, and without yet reversing momentum up, keeping the door open to at least a negative knee-jerk reaction down. Which the report’s reaction fulfilled by dropping to fresh lows. Closing back above 2.93 would start to confirm a bottom is forming.