Bias-parameters
Bias-down target met. Holding?
[pay]S&Ps never recovered above ESu 1323’00 to trigger a long-entry parameter. The 1318’00 bias-down target was tested instead, and new lows probed it by nearly 3 points. Buyers have now failed to convert two consecutive positive divergence in MACD & RSI.
That track record isn’t stopping another recovery attempt that just surged to 1320’00 to signal that sellers had lost traction. If sellers aren’t in control, then dips should hold any test of 1317’00 as support. And a short-squeeze should be triggered if 1320’00 is exceeded.
Just within the context of being noise, not resuming the decline today should allow S&Ps to test 1323’00. A short squeeze could test 1325’00. But under 1317’00 would have potential for extending the decline by falling sharply into the close, and then probably down much further at Monday’s open.
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New low, new opportunity… forget the bias-down?
[pay]A last-minute dive to the ESu 1326’00 gave sellers an extra 10 minutes to prove their case. S&Ps continued dropping to new lows at 1320’75 that fulfilled the required retest of this morning’s low. A 3-point bounce from there has consolidated for nearly 30 minutes before probing the low by 2 ticks.
This is still 2 points above the afternoon’s 1318’00 bias-down target, but I would be more interested in being long back above 1323’00.
It is very dangerous to be on the wrong side of new lows Friday afternoon. The earlier a short-squeeze appears, the more likely it will be retraced entirely today or Monday. The longer no recovery becomes obvious, the more likely this downleg will extend down much further before its next chance at a short-squeeze.
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Afternoon bias
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| FRI afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 1331 | 1333’50 |
| …would target | 1336.25 | 1338’75 |
| Bias-down: under | 1323.50 | 1326’00 |
| …would target | 1315.50 | 1318’00 |
| Signal status: late Bias-down | FAQ | |
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Bias-down target met. But wait, there’s more!
[pay]S&Ps resumed sliding out of the cash session’s open until probing the ESu 1329’00 bias-down target by nearly 1 point. The emotional extreme that formed there was likely to be retested, although 3-min RSI wasn’t oversold to actually require the low’s retest. Nonetheless, a 3-1/2 bounce back up to overnight prior lows was retraced back the low, and lower.
A low not requiring a retest makes its eventual retest bearish. So S&Ps continued sliding to within 1 tick of 1323’00 where both 1-min and 3-min RSI did become oversold to both predict a bounce and to require the bounce to fail. A 4-point bounce should now be retraced back down to the low, where we’ll watch for signs of bottoming (e.g. positive divergences, buy setups) before the morning’s timing window closes at 10:30.
Without this being a bottom, a new downleg would be underway – steeper and deeper than the one that targeted 1337’50. And a close today back above 1342’50 would finally form a bottom. I am uncomfortable with either scenario developing today during expiration, for which there is no historical comparison to confirm, and many current influences to contradict. But we’re playing the near-term moves, for which the same parameters apply.
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Morning bias
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| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1340.75 | 1343’25 |
| …would target | 1348.50 | 1351’00 |
| Bias-down: under | 1332.50 | 1335’00 |
| …would target | 1326.50 | 1329’00 |
| Signal status: Bias-down target met | FAQ | |
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