S&P
Post-open Review… Better bottom.
Can the target form a bottom? Can it even hold.
The decline’s premise since topping at 2110.00 has been its likelihood for unfolding rapidly, and its potential to 2043.00. It unfolded rapidly, and 2043.00 has been met.
Its first test bounced to 2047.00 before reversing to fresh lows at 2040.75. The next bounce is now probing back above 2045.00. And triggering a buy signal.
The first reaction up from 2043.00 had targeted 2046.75. Its next reaction up would target 2049.00, so long as 2042.00 now holds as support.
Attacking fresh lows to within 1 point would be likely to break lower, and probably extend down substantially. Meanwhile, holding 2043.00 would allow a bottom to begin trying to form.
Pre-market Tour (recording & summary)
Bouncing to 2058.00 — one point short of this morning’s 2059.00 bias-down signal — has resolved back down to the earlier 2051.50 low. Renewing the bias-down signal is increasingly likely, by not holding the 2053.00 bias-down target through 10:15. And for all intents and purposes, although interim support might try to interfere along the way down, the long-standing 2043.00 target could be tested this morning. Long-entry would be considered only if renewing the bias-down signal becomes unlikely.
Details and other markets coverage are discussed in the pre-market Tour recording here.
The First Trade… Lower.
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…
Overnight optimism ahead of Wednesday’s FOMC events left a little on the table for post-open gains. But only a little, and even less for the predictable relief “rally” (more accurately, a blip-up) on the no-change news. But it wasn’t very long after Yellen’s Q&A that a plunge fulfilled the balance of expectations by retesting 2063.50. It was still being tested at the close.
Overnight action’s new info…
Ranging couldn’t withstand the Nikkei plunging, triggering a break under Tuesday’s 2054.75 lows down to 2051.75. That’s where Europe’s opens were greeted, and price has firmed to 2058.00.
If, then…
The only variable to yesterday’s template not met was to probe or attack Tuesday’s lows. Delaying either would only require a probe. Isolating that to the overnight session would require recovering to gap up at Thursday’s open. Meanwhile, the 2043.00 objective remains in-play. And maintaining a gap down under Tuesday’s lows could make the Bearish WedEx become Actively bearish, albeit delayed.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2050.50 would be unlikely to recover the 2053.00 bias-down target through 10:15 and renew the bias-down signal. Exiting the open above 2060.50 would be unlikely to trigger the 2059.00 bias-down signal at 10:15.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2075.50 | 2066.75 |
| …would target | 2081.25 | 2072.75 |
| Bias-down: under | 2067.50 | 2059.00 |
| …would target | 2061.75 | 2053.00 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET EXCEEDED | 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’s likeliest scenario eventually played out. But its last leg down took awhile before unfolding. And that prevented the potential for an optional leg up.
Essentially, optimism for a favorable FOMC statement proved self-fulfilling, fully discounted upon triggering a knee-jerk reaction up. Quickly reacting back down seemed to put the market into shock — so little reward for longs attracted more buyers looking for a delayed pay-off.
Ultimately, the position-squaring window saw those earlier optimists running for the exits. The relevant 2063.50 level was being tested at the close, not recovered to start forming a bottom, and not broken to further confirm 2043.00 is in-play.
Bearish WedEX triggered. Not actively bearish, although gapping down Thursday under Tuesday’s 2055.00 lows could do that by proxy. Quickly recovering a gap down under Tuesday’s lows could form a passively bullish signal.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.