S&P
Post-open Review… Bearish context confirmed.
Bias-down, until disproved, which they’re trying.
This morning’s bias parameters have been updated HERE to reflect the Dec discount.
The pre-open 9-1/2 point slide to 2170.00 (basis Dec) had fulfilled the likely retest of yesterday’s 2170.50 low. Holding its retest through the open could have signaled that sellers were done. Testing it post-open down to 2169.25 did bounce, but not until after triggering the 2173.25 bias-down signal at 10:15.
So, this is a bias-down environment.
That didn’t prevent violating the 2171.50 bounce limit. And it didn’t prevent a surge up to 2176.25. But it’s too late for recovering the 2173.25 bias-down signal to be relevant. Invalidating bias-down must now recover the 2180.50 bias-up signal when the bias environment begins lapsing at 11:30.
Meanwhile, this is a bias-down environment.
We assume the surge to 2176.25 is only a temporary detour, a last gasp of buying. Back under 2172.75 would start to signal the bias-down remains influential. Otherwise, back above 2176.75 would target a test of the 2180.50 bias-up signal — and possibly also its recovery through 11:30 to invalidate the bias-down.
Pre-market Tour (recording & summary)
The ECB statement was greeted by the market having returned to unchanged at 2179.50 basis Dec (2185.50 basis Sep). Its knee-jerk reaction dipped 2 points, which were soon recovered — but not reversed, as Draghi’s press conference was also greeted at unchanged. Which apparently was unsatisfactory to him.
A 9-1/2 point slide has now probed under yesterday’s low at 2170.50 basis Dec (2177.50 basis Sep), fulfilling its likely retest. Holding its test through the open could also avoid triggering the bias-down signal at 2173.25 basis Dec (2179.75 basis Sep), which would put into play an offsetting test of the bias-up signal.
Not holding yesterday’s low and triggering bias-down could get very ugly through tomorrow morning, if not longer.
Details and other markets coverage are discussed in the pre-market Tour recording here.
The First Trade… All eyes on ECB.
Proper context can start the day with a solid win and make all the difference.
CHARTROOM LINK
(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Wednesday’s open needed only to fill the gap back up to Tuesday’s 2185.50 cash session close before it would be vulnerable to reversing down. The open did more than that, briefly probing above Tuesday’s last-minute 2186.75 high, and then reversing down, forming a Pivot Reversal structure. Reversing down persisted through the noon hour to 2177.50. The balance of the session trended back up to 2185.50. No unfinished business was left outstanding, but the morning’s Pivot Reversal structure identified buyers as weak-handed.
Overnight action’s new info…
Yesterday afternoon’s recovery had begun firming to greet Europe’s opens another point higher at 2186.50. The immediate reaction extended to fresh highs at 2189.25. That has since been retraced down to 2185.50 ahead of this morning’s ECB policy statement.
If, then…
Wednesday’s Pivot Reversal structure essentially requires a retest of the morning’s 2177.50 low. Not having done it already Wednesday makes it very likely to be done Thursday. So, gapping up and probing higher this morning would remain extremely vulnerable to reversing down sharply this afternoon. Regardless of the gap up that futures currently indicate, the actual open will depend more on reaction to the ECB monetary policy statement and ECB chair Draghi’s Q&A. Gapping up above yesterday’s high can ignore buyers not gaining traction yesterday, albeit probably only for the morning.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2189.00 would be likely to trigger the 2187.00 bias-up signal at 10:15. Exiting the open under 2183.50 would be unlikely to trigger bias-up.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2188.00 | 2180.50 |
| …would target | 2193.00 | 2185.75 |
| Bias-down: under | 2180.50 | 2173.25 |
| …would target | 2174.75 | 2167.25 |
| Signal status: BIAS-DOWN | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
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.
Post-market Wrap (recording & summary)
Wednesday morning trapped shorts. Gapping down slightly to 2181.50 was recovered to probe slightly above Tuesday’s prior high to 2186.75. The recovery was rejected resoundingly, reversing down through the noon hour to test support at the morning’s 2177.75 bias-down signal.
Ending the session there would have formed a bearish Pivot Reversal setup. It’s still bearish, so long as the initial rally’s peak wasn’t recovered through the close. It wasn’t. So, spending the balance of the session rallying89 points to 2185.50 wasted buying pressure.
More so, 2185.50 neutralized the afternoon bounce’s attraction. And no traction was gained for the effort. Gapping up Thursday above Wednesday morning’s 2186.75 high could still probe higher during the morning, and would still be vulnerable to rejection. Meanwhile, probing under Tuesday’s 2177.50 low is likely Thursday.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.