Bias-parameters
Bias-down signaled, and more.
[pay]The bounce to ESm 1370’25 apparently took advantage of the relatively illiquid overnight environment to add a couple of points to its gain. But the effort still lived up to expectations by producing a running start for sellers to take another shot at breaking under overnight lows. Through the 10:15 bias window, S&Ps did manage to print a new relative low at 1361’50.
Unless the ESm 1365’75 bias-down signal were recovered through 10:30, a drop targeting 1352’50 is underway. And if that isn’t retraced by the close, then the break under recent lows around 1365’00 would signal momentum reversing down.
Meanwhile buyers are fighting to take traction away from sellers as S&Ps are still bouncing up to ESm 1365’00 with 10:30 just 10 minutes away. That wouldn’t equate to a buy signal, but it would at least delay the downleg.[/pay]
Morning bias
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| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1372.50 | 1374’00 |
| …would target | 1378.50 | 1380’00 |
| Bias-down: under | 1363.50 | 1365’00 |
| …would target | 1351 | 1352’50 |
| Signal status: Bias-down… target met | FAQ |
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No-bias, for the moment.
[pay]The noon hour’s narrow ranging is a smaller souvenir of 6-hour range that preceded the cash session open. Regardless, neither signal was triggered, and trending attempted before the bottom of the hour would be suspicious. This market is very much at equilibrium, whether floating in the middle of a wide range or constrained in a narrow range. Regardless, the first reaction to FOMC minutes at 2:00 is likely to be reversed more substantially in the opposite direction.
That should reverse down from a knee-jerk reaction up to ESm 1374’00, or reverse up from a reaction down to 1363’00. In either case, reversing at least 3 points would make the reversal much more likely to continue.
One alternate scenario is that S&Ps will have already broken beyond one side of the 1363’00-1374’00 range. That would be much less likely for the FOMC reaction to reverse, and more likely to continue trending in that direction.[/pay]
Afternoon bias
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| TUE afternoon signal (triggered at 1:20pm ET) | SPX | ES |
| Bias-up: above | 1368.75 | 1370’25 |
| …would target | 1374.50 | 1376’00 |
| Bias-down: under | 1364.25 | 1365’75 |
| …would target | 1357.50 | 1359’00 |
| Signal status: No-bias (don’t forget about the FOMC minutes due at 2:00pm ET. The reaction might not honor the biases) |
FAQ | |
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No-bias in a bias-down market.
[pay]The old bias-down target at ESm 1365’00 continued holding tests as support, and the new bias-up signal at 1368’25 held a couple of tests, too. In fact, it was still being tested 5 minutes after the 10:15 bias window. And not by a little. Rejecting it by 10:30 would make the bias-down signal at 1363’00 very likely to be tested.
I don’t like taking the bias-up signal here because it is triggering late, and it is already a revised number. If it is valid at this late stage, then it is because the original bias-down target satisfied selling pressure.[/pay]