S&P
Mid-day Update… Back to business.
Rejection attempt fails, decline resumes.
Invalidating this morning’s bias-up had put into play tests of 2046.00 and 2042.00. The bias environment exit was firming from a test of 2046.00 when a Fed speaker’s comments made headlines, and triggered a spike up.
There was room to 2052.50 before that might actually resume the overnight rally effort. But 2052.50 was only touched and not triggered before reversing back down.
A sell signal triggered, as did this afternoon’s 2047.00 bias-down signal, and the 2042.00 bias-down target has been probed down to 2039.50.
Persistently oversold 3-minute RSI at the low suggests a bounce would be limited and fail. So does the low having stopped optimistically 3 ticks short of touching yesterday’s low.
Bouncing anyway has room up to 2044.00-2045.00 before suggesting a more substantial recovery underway. Otherwise, the trend remains down, next targeting 2034.75.
Look ahead: Economic Calendar – for Fri May 6, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Friday’s monthly Employment Situation report is very reliable for triggering a price reaction. It can also inhibit volatility Thursday afternoon. The rig count has also become reliable for inhibiting price action before it.
*Employment Situation
8:30 AM ET
*Baker-Hughes Rig Count
1:00 PM ET
Consumer Credit
3:00 PM ET
Treasury STRIPS
3:00 PM ET
Afternoon Bias
| THU afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2069.50 | 2053.25 |
| …would target | 2065.50 | 2059.50 |
| Bias-down: under | 2053.00 | 2047.00 |
| …would target | 2048.25 | 2042.00 |
| Signal status: BIAS-DOWN | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
1. At 1:20, 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 1:20 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 1:20 would invoke a grace period through 1:30 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 1:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.
Post-open Review… The correction cookie crumbles.
Bias-up target met, Bias-up signal rejected.
Gapping up above at least 2057.00 would have begun rejecting the downtrend, but the open was at only 2051.00. An aggressive post-open surge would have kept alive the rejection potential, but it dipped to test yesterday afternoon’s 2048.00 “lower prior highs.”
None of which qualified as resuming the decline’s momentum. Only as not exploiting the opportunity to invalidate the decline altogether. So, bouncing anyway would be considered only temporary backing-and-filling, refueling sellers.
The 2049.75 bias-up signal triggered, and its 2055.50 bias-up target was met to within 3 ticks. Quickly. So quickly, that there was time for violating a bounce limit, triggering a sell signal, and retracing the bias-up signal through 10:30 back down to 2048.00.
So, this morning’s bias environment is Bias-up Rejected. There is no unfinished business above. There is also no requirement to trend down — while the burden of proof is on buyers, the downtrend remains intact.
2048.00‘s retest was not bullish. Breaking back under it would target 2046.00 and 2042.00. So long as 2048.00 support isn’t broken, the balance of the morning could back-and-fill again.
Pre-market Tour (recording & summary)
The last overnight surge testing 2059.50 had been retraced to its 2051.50 origin. Bouncing to 2055.00 — which is this morning’s bias-up target — has reacted down even lower to 2050.00.
The bullish scenario requires recovering at least the lower-end of 2057.00-2059.50 with little or no delay. So, the bullish scenario is likely to surge out of the open, if not already surging into it. Any less aggressive firming would be suspicious.
The bearish scenario should reverse back under 2048.00, but not necessarily immediately. The range in between is not predictive.
Details and other markets coverage are discussed in the pre-market Tour recording here.