Bias-parameters
Afternoon bias
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| MON afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 1360.25 | 1362’75 |
| …would target | 1367 | 1367’50 |
| Bias-down: under | 1355.50 | 1358’00 |
| …would target | 1348.50 | 1351’00 |
| Signal status: Tested both signals | FAQ | |
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No-bias: temporary relief, and a better short-entry?
[pay]S&Ps have only improved since the opening tick, which was the cash session’s low. The ESu 1354’25 bias-down signal held repeated tests as support, so now the 1361’25 bias-up signal is likely to be tested. That would also fill the gap back to Friday’s cash session close, and possibly also attack the 1364’25 overnight highs. Pullbacks meanwhile should hold 1357’50 as support.
A word of caution: The cash session’s open left outstanding a gap that will want to be filled – more so than the bias-up signal needs to be tested. Back under 1355’00 would make the bias-up signal’s test unlikely, and then back under the 1354’25 bias-down signal would put sellers back in control for a much larger downleg.
If nothing else, this morning’s gap down invalidated the Lehman catalyst for extending the recovery. Price can still firm while the market is searching for a new reason to rally, but I don’t want to be long when the market realizes that reasons might not exist.
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Morning bias
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| MON morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1359.25 | 1361’75 |
| …would target | 1365 | 1367’50 |
| Bias-down: under | 1351.75 | 1354’25 |
| …would target | 1346.75 | 1348’25 |
| Signal status: No-bias, tested bias-down signal | FAQ | |
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Afternoon bias
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| FRI afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 1357.75 | 1360’25 |
| …would target | 1363.75 | 1366’25 |
| Bias-down: under | 1350 | 1352’50 |
| …would target | 1340 | 1342’50 |
| Signal status: waiting for trigger, testing bias-down signal | FAQ | |
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Bias-up target met.
[pay]A knee-jerk reaction to CPI recovered to new session highs which touched the ESu 1352’50 bias-up target. That was several minutes ago and more 3-1/2 points higher. The 3-min RSI was overbought at the peak, making its retest likely regardless of the interim pullback. The predictable move has now ended, except for the high’s likely retest, which could already be underway with the pullback having tested 1349’00.
Probes of the bias-up target are possible, but I am not expecting this move to extend higher. S&Ps could still be ranging in this area or already pulling back, perhaps in reaction to the next econ report due at 10:00. Regardless of whether this pattern is forming a durable bottom or preparing for a steeper downleg, a retest of this week’s lows remains likely. A long-entry above the bias-up target would require confidence that 1355’00 is being broken.
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