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The First Trade & Pre-open Tour Recording… Paradigm shift.
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…
Monday’s open was barely greeted with a pulse. But it wasn’t greeted in decline so a pullback wasn’t likely. That didn’t automatically default to resuming the rally. Neither of the two consecutive closes above 2701.00 securing the rally’s next higher objective at 2756.00 was impressive. Even less impressive was narrow ranging since Thursday afternoon, and now greeting Monday’s open unchanged at Friday’s 2704.50 close. So, our strategy was to consider fading tests of either end of the range, which prepared us for buying into the open’s dip to 2697.00 that held the bias-down signal. Reversing up to the morning’s 2710.25 bias-up signal extended to trigger and then fulfill the afternoon’s bias-up target and Friday’s “unfinished business” at 2719.00-2719.50. A late break higher touched 2725.00 into and out of GOOG’s post-close earnings.
Overnight action’s new info…
We have new behavior from the overnight. If follows GOOG’s earning reaction having surged $30, and then collapsing $60 back into negative territory. The Globex open soon retraced its late surge from 2725.00 down to 2716.25 before midnight. Narrow sideways ranging again developed, similarly to the prior two nights. But very soon after Europe’s opens a 10-1/2 point rally began to 2728.25. Its probe above yesterday’s highs developed complexity to qualify as a “new Globex trend extreme” before reacting down to 2725.00.
If, then… (notes to accompany the Tour recording)
Nothing requires extending higher uninterrupted. Yesterday’s rally created more room to expend and absorb selling pressure while maintaining momentum to the 2756.00 target in-play. Last night’s “new Globex trend extreme” requires an intraday retest, which helps to ensure a reaction down will recovery. Monday’s open opted not to exploit its vulnerability to a deeper pullback, and so might this morning. Attempting to extend the rally post-open and only retesting the overnight high could probe back under the overnight lows.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2723.75 would be likely to trigger the 2722.00 bias-up signal at 10:15. Exiting the open under 2717.50 would be unlikely to trigger bias-up.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2723.25 | 2722.00 |
| …would target | 2731.25 | 2730.00 |
| Bias-down: under | 2715.25 | 2714.00 |
| …would target | 2707.00 | 2705.75 |
| Signal status: BIAS-UP, BIAS-UP TARGET MET | . | |
| BIAS VIDEOS… INTRO // EXAMPLE | ||
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.
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))
1.1485 was still being tested as support into Monday’s open, and then probed intraday. Closing back above 1.1520 can still launch another upleg.
Gold Feb Contract (GC, ETF: (GLD))
Sunday night’s dip tested Tue-Wed’s “lower prior highs” so that retesting Thursday’s 1328.30 gap up above all prior highs. Closing back above 1323.00 would put into play fresh highs targeting 1333.00.
Silver Mar Contract (SI, ETF: (SLV))
Friday’s low had already retraced Wednesday’s “lower prior highs,” and the retracement extended lower Sunday night, filling the ga back down to last Monday’s 15.75 close. Closing back above 15.82 — which was already being probed Monday morning — can now retest Thursday’s 16.13 gap up to neutralize its attraction.
30-year Treasury Mar Contract (US, ETF: (TLT))
Friday’s dip had held the gap between Wednesday’s close and Thursday’s gap up at 145-28. Extending lower Sunday night persisted sharply lower Monday morning down to 145-00. Back above 145-16 would target at least 146-04, and possibly resume the rally.
Crude Oil Mar Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Narrowly ranging around Friday’s highs Sunday night gave way to gap down Monday morning and retrace lower prior highs at 53.30. Closing back above 54.15 keeps alive upside potential
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Having ended the week testing new extremes, Monday was likely to extend lower, which had begun already Sunday night. Gapping down to fresh lows at 2.65 Monday makes an immediate recovery unlikely, even if Tuesday were to begin rallying.
Mid-day Update… Ratcheting up.
Now probing Friday morning’s highs.
The open’s lower and lower lows ultimately held a test of this morning’s 2698.75 bias-down signal. Its offsetting test of the 2710.25 bias-up signal was fulfilled as the bias environment began lapsing. Price held up through the noon hour, extending flat-to-higher. Now Friday morning’s highs are being probed up to 2717.25.
This afternoon’s 2713.00 bias-up signal has triggered, putting into play its 2719.00 bias-up target. Friday morning’s “unfinished business” at 2719.25 would be neutralized there, too.
Nothing requires meeting either target today, or extending even high if met. RSIs are overbought at the high, so a reaction down would require being recovered. A reaction has room to 2711.00 before suggesting a more substantial detour down is underway.
Look ahead: Economic Calendar – for Tue Feb 5, 2019
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Tuesday’s post-open services data aren’t individually reliable for influencing price action. But their timing to each other is vulnerable to reinforcing a surprise, or to contradicting the other — in either case, creating more volatility.
Redbook
8:55 AM ET
*PMI Services Index
9:45 AM ET
*ISM Non-Mfg Index
10:00 AM ET
3-Yr Note Auction
1:00 PM ET