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The First Trade & Pre-open Tour Recording… Uh-oh, another rally retraced.
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…
Despite Wednesday’s unusual probe under the prior session’s 2829.00 low — unusual, for developing ahead of the afternoon FOMC events — the session was an awesome display of the If-Then analysis’ utility. The FOMC day context told us that extending so low as to attack 2817.00 from Tuesday’s 2841.00 close was weak-handed all the way. And that told us the overly-discounted FOMC news was almost impossible not to react favorably. In fact, the policy statement was greeted at 2825.25, already long from 2822.00 after a failed long-entry at 2825.25, and its reaction surged to 2842.50 and 2849.00. Then the no-bias environment context told us that everything above the 2828.75 bias-up signal was “no-bias trending” requiring retracement. In fact, it was retraced entirely before the position-squaring window opened, and retested into the close. Which also fulfilled the bigger picture context of the recent distributive pattern I began highlighting Monday, producing its third consecutive failed intraday rally.
Overnight action’s new info…
No-bias trending can also be attracted to retracing its 1:20 print. That was essentially 2823.25, and it was met before the Globex open. Its test reacted up from 2822.75 to pierce this morning’s 2835.50 bias-up signal, and then retraced entirely through Europe’s opens to eventually attack 2820.00. Now a bounce to yesterday’s 2827.00 futures close has collapsed to fresh lows testing 2819.00.
If, then… (notes to accompany the Tour recording)
The ongoing pattern of retracing intraday rallies just retraced its third. It was both the biggest retracement AND from the lowest levels. Now an overnight rally — not an arbitrary bounce, but a bounce up to this morning’s bias-up signal — has been retraced already. Yesterday’s intraday rally makes it seem that buyers are strong and willing. But that was a function of the deeply oversold condition that greeted the rally’s FOMC catalyst. More important is the intraday rally’s complete reversal, and now immediately following it comes last night’s reversal. All of which makes it seem that strong-handed sellers are losing patience waiting for rallies to sell. Not recovering yesterday’s highs today, let alone trending down to fresh lows, could keep the market on defense into and out of the weekend.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2818.75 would be likely to trigger the 2823.50 bias-down signal at 10:15. Exiting the open above 2825.25 would be unlikely to trigger bias-down. Exiting the open under 2830.75 would be unlikely to trigger the 2835.50 bias-up signal.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2830.25 | 2835.50 |
| …would target | 2836.75 | 2842.00 |
| Bias-down: under | 2818.25 | 2823.50 |
| …would target | 2810.75 | 2816.00 |
| Signal status: BIAS-UP, TESTED BIAS-DOWN SIGNAL | . | |
| 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)
Bearish. Two days of hammering back at intraday rallies were joined Wednesday by a third. 
It was the most dramatic of the series, completely retracing a 24-point rally within 4 hours.
The rally was helped by having probed Tuesday’s 2829.00 low uncharacteristically ahead of FOMC — thanks to a barrage of Brexit headlines, topped off by a Trump China trade comment that spiked to fresh lows attacking 2817.00. So much weak-handed discounting ahead of FOMC made it almost impossible not to react favorably. The policy statement was greeted at 2825.25 and surged to 2842.50, then extended up to test 2849.00.
All of which was “no-bias trending” for originating during a no-bias environment, requiring a retracement of the 2828.75 bias-up signal. It was met before the position-squaring window opened, and retested into the close. No-bias trending can also retrace the 1:20 print, which was essentially 2823.25, and it was touched after the futures close. There is no “unfinished business,” above or below.
But there is a three-day pattern of retracing ever-larger intraday rallies. And the series’ third was both the biggest retracement AND the lowest. The market may be playing defense into the weekend if Thursday morning hasn’t recovered Wednesday’s high.
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 Jun Contract (EC, ETF: (FXE, UUP))
Still hovering at recent highs ahead of Wednesday afternoon’s FOMC events. Avoiding the 1.1405 sell signal required almost literally exploding higher to 1.1525, which was the reaction to FOMC. Upside momentum remains intact above 1.1500, and momentum reverses down under 1.1465.
Gold Apr Contract (GC, ETF: (GLD))
Tuesday’s choppy sideways ranging repeated Wednesday ahead of the afternoon’s FOMC events, but surged through last week’s highs to 1316.00 in reaction. The rally has likely resumed, so long as the post-close surge isn’t rejected overnight.
Silver May Contract (SI, ETF: (SLV))
Wednesday’s session was greeted by overnight weakness, but the recent range held ahead of the afternoon’s FOMC events. Surging in reaction tested recent highs up to 15.55, needing a second consecutive higher close Thursday to confirm the trend up has resumed.
30-year Treasury Jun Contract (US, ETF: (TLT))
After Tuesday held a test of the 145-16 sell signal as expected, Wednesday’s open gapped back up to the 146-00 buy signal. Neither end of the corridor between signals was broken in time to greet Wednesday’s FOMC events from a position of strength or of weakness. The reaction did immediately recover 146-00 and extend to 147-00. Still, a second consecutive higher close on Thursday would confirm the uptrend had resumed.
Crude Oil May Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Closing under 59.40 Tuesday after at least touching 59.65 intraday had signaled upside momentum had ended. But room down to the 58.50 reversal signal was used for overnight weakness ahead of Wednesday’s EIA report, which triggered a surge up to fresh highs at 60.20. Its reaction down to 59.50 was recovered back to the high, signaling the uptrend remains intact.
Natural Gas Apr Contract (NG, ETF: (UNG, UNL))
Tuesday’s surge above the 2.84 buy signal may not have been confirmed by a second consecutive higher close on Wednesday, but closing above 2.84 again did offer the next best degree of confidence that the trend has reversed up. .
Mid-day Update… Heavily discounted. But also trending.
Weak-handed or not, sellers are being rewarded.
Testing, retesting, and re-retesting this morning’s 2828.50 bias-down signal ultimately held in time to trigger late no-bias. An offsetting test of its 2842.25 bias-up signal was put into play. But it was hardly attacked, but for a structural fresh high at 2833.00.
And then fresh lows were probed down to 2821.00. A recovery seemed to be forming around 2825.00 when a Trump China trade comment triggered a spike down to fresh lows at 2817.25. Now a bounce is retesting 2825.00.
Weak-handed sponsors are likely producing the noon hour’s fresh lows. As likely as they were producing this morning’s lows. Which is to say, so what. They’ve been pretty productive.
Usually trending beyond a prior extreme (yesterday’s lows) would be difficult ahead of FOMC. Of course, usually price action reacts to political uncertainty like this morning’s Brexit headlines.
The latter may have ended for the day, considering what time it is. And the former is about to begin, with the Policy Statement at 2:00 and the Fed Chair Q&A at 2:30. Perhaps those headlines will find price sufficiently discounted for a favorable reaction up — or at least, a recovery from a knee-jerk reaction down.