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Post-open Review… The picture comes alive.
Upside target met, meets downside reaction.
Retracing the overnight 20-point rally to 2600.25 had come within 1 tick of the 2580.00 earlier Globex low. 
Before the open. The open was greeted 5 points higher, making the Globex-flip setup unlikely to try forming.
Immediately rallying post-open became a Running Correction as overnight highs were recovered. It launched a surge to 2607.00, fulfilling the rally’s next higher objective at 2606.00. A collapse began several minutes later and extended to retrace the Running Correction’s 2593.00 low.
Bias-up triggered easily. But renewing the signal above its 2595.75 bias-up target failed at 10:15, despite having probed it by 11 points just several minutes earlier. This is still a bias-up environment, so the bias-up target can be exceeded again and the rally could even resume. But either is always difficult when buyers have gotten ahead of themselves.
We’ve expected a fresh high to test 2606.00, which it did. We’ve expected that probing fresh highs would be tenuous if attempted, which it was and it is. No matter how much we expect that to result in a peak, nothing prevents trying to probe higher and delaying a reversal down.
The First Trade & Pre-open Tour Recording… Getting on with it, one way or the other.
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 session wasn’t much different than Friday. Both sessions can be defined as gapping down and then trending back up. Monday’s gap down to 2575.50 reacted down 4 points but stopped more than 3 points above Sunday night’s low, and quickly reversed up to 2588.00. The impatient optimism inhibited reinforcements, and its early momentum peak barely attacked 2590.00 during the afternoon. A late dip touched 2580.00 into the close.
Overnight action’s new info…
Globex initially ranged narrowly at 2580.00 but soon began trending back up. Hovering pessimistically short of Monday’s highs suddenly spiked up to 2595.00, and ranged flat-to-higher through midnight up to 2598.00. Another spike up pierced 2600.00, and all recent highs. Almost all of which has been traced. Reversing down into and out of Europe’s opens eventually attacked 2585.00. Its retest launched a bounce back above yesterday’s highs to 2592.00, which just collapsed 10 points to probe back under 2582.00.
If, then… (notes to accompany the Tour recording)
Throughout the past week’s ranging, this stage of the pattern has remained likely to probe fresh highs. Structurally, at least probing above prior highs. Calculably, to at least 2606.00. Overnight would suffice, but intraday is always preferable. Friday’s failed attempt at completely recovering from gapping down began undermining the likelihood of fresh highs with a vulnerability to just collapsing into a new downleg. More so after Monday’s similar pattern. Last night’s action isn’t optimal, but could suffice for a fresh high, and the pattern remains vulnerable to collapse. Not already collapsing into Tuesday’s open remains likelier to probe fresh highs, perhaps also 2606.00. Meanwhile, the overnight round-trip is threatening the 2580.00 earlier Globex low, after having probed above the prior session’s high, which could form a bearish Globex-flip setup. (I describe the Globex-flip setup in the Market Tour.)
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2590.75 would be likely to trigger the 2588.00 bias-up signal at 10:15. Exiting the open under 2584.25 would be unlikely to trigger bias-up.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2587.75 | 2588.00 |
| …would target | 2595.50 | 2595.75 |
| Bias-down: under | 2575.50 | 2576.00 |
| …would target | 2568.75 | 2569.25 |
| 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.
Market Wrap (recording & summary)
Monday’s gap down was less than 2 points under Friday’s 2577.00 low. And the first post-open action probed it down to 2570.75. But not down to the 2567.25 overnight low, and not for long, before recovering 2577.00 and never looking back down. Of course, while preoccupied with not looking back down, the recovery attempt was having difficulty getting past the open’s highs.
Opening selling pressure was brief and optimism was impatient, two errors the recovery attempt made. More prolonged post-open weakness, not necessarily deeper, would have struck a bullish balance between pessimism and optimism. That could have launched a bigger recovery, instead of struggling to attract reinforcements.
The ongoing range now becomes more dependent on 2571.00 support where 2567.00 had been critical previously. Meanwhile, the range becomes more vulnerable to simply collapsing into a new downleg, instead of first probing fresh highs at 2606.00 or higher.
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))
Already having extended Thursday’s pullback an extra day, Wednesday’s surge needed confirmation without much further delay. Sunday night’s shallow fresh lows were recovered pre-open, but Monday’s session has only ranged narrowly sideways.
Gold Feb Contract (GC, ETF: (GLD))
Friday’s narrow ranging persisted Sunday night and Monday, still not rejecting the hovering at recent highs. Another pullback can’t be discounted, whether or not deeper, but any additional pullback should be brief and recovered to fresh highs still targeting 1319.50.
Silver Mar Contract (SI, ETF: (SLV))
Narrow ranging Monday continued the consolidation that was underway into the weekend, still not rejecting the recent higher, but also not immune to another dip before probing higher.
30-year Treasury Mar Contract (US, ETF: (TLT))
Probing above the 146-04 buy signal Sunday night by nearly a quarter-point was nevertheless retraced back to 146-04 before Monday’s open, which pulled back intraday to maintain the trading range above 145-08.
Crude Oil Feb Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
The reaction down from Friday’s pre-open test of 53.30 extended lower Sunday night to test 50.45. It was recovered enough before Monday’s open to hold 50.85-51.00 as support during narrow intraday fluctuation around unchanged. A deeper intraday probe is likely.
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
Gapping up sharply Sunday night was maintained through Monday’s open to potentially form an Island Reversal from the past 1-2 week trading range. Pullbacks have room down to 3.27 while maintaining the reversal pattern, but any deeper could still hold “lower prior highs” and resume the recovery.