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Mid-day Update…Turnabout is fair play.
Morning bounce absorbed, bearish WedEX in-play.
This being a Friday, an afternoon decline didn’t depend on the open breaking lower. In fact, the market followed the bearish path
I outlined during the Market Tour and retraced its morning rally coming out of the bias environment.
Retraced, but not rejected. Buyers were absorbed, but the trend had not reversed down. Testing 2800.00 was retraced back under 2780.00, but yesterday’s 2786.50 noon hour high was still being overlapped at noon.
That leaves the ground fertile for launching another downleg, but it still needs to be launched. Perhaps it just was, triggering this afternoon’s 2783.25 bias-down signal. But only triggering bias-down, despite having probed 10 points under its 2777.00 bias-down target in the interim.
Now this afternoon’s 2783.25 bias-down signal is being attacked as resistance. Its test should hold, since the afternoon’s bearish WedEX is now influential. It triggered by proxy, so it’s not optimal, but it still gets every benefit of the doubt so long as 2786.50 holds as resistance.
Back above 2786.50 would start making an afternoon rally likelier. The bearish WedEX is sub-optimal and the bias-down target is met and held. Both are loopholes that Friday afternoon’s have a way of leveraging into a reversal. So, regardless of their likely influences, be aware of the potential for another rally.
Look ahead: Economic Calendar – for Mon Oct 22, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Monday’s Fed survey has no track record for influencing price action, and it’s the session’s only econ report. Quarterly earnings continue.
Chicago Fed National Activity Index
8:30 AM ET
3-Month Bill Auction
11:30 AM ET
6-Month Bill Auction
11:30 AM ET
Afternoon Bias
| FRI afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2787.75 | 2790.75 |
| …would target | 2794.75 | 2797.75 |
| Bias-down: under | 2780.25 | 2783.25 |
| …would target | 2774.00 | 2777.00 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET MET | . | |
| NEW: BIAS VIDEOS… INTRO // EXAMPLE | ||
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.
Post-open Review… Off the precipice?
Post-open rally backs away from the ledge.
The pre-open recovery up to 2786.50 was retraced 8 points to greet the open at 2778.25. Half of the opening 15 minutes of volatility elapsed without probing any lower. Perhaps that was just the confidence booster needed to reinvigorate the overnight gains, but more aggressively. Surging through the first half-hour extended up to 2800.50 before a reaction down that actually threatened to reverse.
And that delayed reaction down did extend to 2788.50. Which might yet break lower — its reaction bounced 9 points, but only temporarily as most has been retraced back down to 2791.50.
Any lower would start to signal momentum reversing down. Remember that exiting the morning bias environment (or entering the noon hour) back under a relevant level like yesterday’s 2786.50 noon hour high would be bearish. Otherwise, an afternoon decline become more difficult, and the door would remain open to a short-squeeze.
The First Trade & Pre-open Tour Recording… Keeping a tight lid on it.
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…
Thursday’s “session-long decline” triggered at the 2801.50 open. An 11-point drop was nonetheless recovered up to 2808.00 before the setup’s influence truly kicked in. Every timing window but the noon hour probed its prior timing window’s low on the way down to 2756.50 during the afternoon bias environment. But the final hour also avoided probing its prior timing window’s low, instead bouncing to test the bias environment’s high and to close at 2772.00. More oversold RSIs were left outstanding at the lows.
Overnight action’s new info…
Flat-to-higher ranging got up to 2785.50 before greeting Europe’s opens at 2780.00. And that was on the way back down to unchanged at yesterday’s 2772.00 close. Much of which has now been recovered to attack 2784.00.
If, then… (notes to accompany the Tour recording)
If the session intends to stage another downleg, then it’s keeping its plans very secret. The two prior sessions had ultimately signaled a Globex-flip and a session-long decline, but no post-open setup is currently indicated by the flat-to-higher overnight ranging. Gapping down under Thursday afternoon’s low is the usual resolution to having missed the final hour’s fresh low during a session-long decline setup, but that’s not currently indicated. Either the session actually will avoid another downleg, or else hope still springs eternal and sellers are refreshed for their deepest and most destructive downleg of the set. Any other day of the week would reveal its intent in this setup during the opening 15 minutes of volatility. This being a Friday, a failed morning bounce that doesn’t recover a prior high would still be vulnerable to an afternoon collapse, even without the added influence of a bearish WedEX.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2781.00 would be likely to trigger this morning’s 2779.25 bias-up signal at 10:15. Exiting the open under 2777.00 would be unlikely to trigger bias-up.