S&P
The First Trade… Another recovery?
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…
Gapping down Wednesday to fresh lows testing 2042.00 was quickly retraced 11 points up to 2053.25, and was still 4 points below Tuesday’s close. Trending back down found fresh lows at 2039.00 during the afternoon bias environment. Choppy, flat-to-higher ranging retraced it to attack 2048.00, overlapping Friday’s lows into the close.
Overnight action’s new info…
The Globex session immediately began contrasting itself to Wednesday afternoon’s choppy, flat-to-higher ranging. Trending up through 2048.00 extended to attack 2057.00 ahead of Europe’s opens. A reaction down to 2051.50 was recovered by a surge up to 2060.00. The surge’s complete retracement down to 2051.00 is trying to recover, now testing 2055.00.
If, then…
Tuesday’s break putting into play 2030.00-2035.00 was not invalidated, but it wasn’t very productive. Hold-short was narrowly avoided as there remained vulnerability to a bigger bounce overnight. But actually reversing the trend would require gapping up to and through 2057.00-2059.50. In fact, the overnight high fully tested this resistance. Its reaction down to 2051.00 is both steep and deep, but it has plenty of time to recover. Regardless of gapping up and regardless of the overnight highs, not triggering bias-up would maintain the ongoing downtrend.
First Trade…
Exiting the open at 9:45 above 2052.50 would be likely to trigger the 2049.75 bias-up signal at 10:15. Exiting the open above 2057.00 would be likely also to exceed the 2055.00 bias-up target at 10:15 to renew the bias-up signal. Exiting the open under 2048.00 would be unlikely to trigger bias-up.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2056.00 | 2049.75 |
| …would target | 2061.75 | 2055.50 |
| Bias-down: under | 2048.75 | 2042.50 |
| …would target | 2041.75 | 2035.50 |
| Signal status: BIAS-UP REJECTED | 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)
The morning’s choppiness didn’t resolve in the decline’s resumption. But neither did it resolve in the decline’s retracement. It just resolved in more choppiness.
That choppiness wasn’t without form, that being an inverted Head & Shoulders. Three of them actually, which doesn’t make any one of them any likelier to reverse the trend back up. But a blip-up held resistance at the noon hour’s 2047.75 high before reversing back into the range.
The late reversal didn’t extend back under a prior low which would have merited a hold-short. But the afternoon’s Head & Shoulders created a pivotal support trendline around 2043.00 whose break could resume the decline overnight. Otherwise, reversing the trend up requires immediately recovering 2057.50, and any shallower strength remains likely to resolve down.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.
Daily Spot…
A daily summary of high-profile members of several complexes… View a more detailed discussion of each chart at the end of today’s Market Wrap.
Eurodollar Jun Contract (EC, ETF: (FXE, UUP))
Testing the 1.1485 sell signal overnight and again Wednesday morning was held both times, suggesting an intraday test of the rally’s 1.1600 target will print before a durable decline develops.
Gold Jun Contract (GC, ETF: (GLD))
Probing under the 1286.00 pullback limit could be absorbed by closing the same session back above 1289.00. At least overlapping 1286.00 through the close would undermine the downside momentum, keeping alive the attraction up to 1313.50. But a second consecutive close under 1286.00 would instead trigger a deeper pullback first, although probing fresh highs would still be likely to fail.
Silver Jul Contract (SI, ETF: (SLV))
Barely managing to close back at or above the 17.50 pullback limit Tuesday still needed to resolve Wednesday morning in rally mode to prove the pullback had ended. Instead, it extended lower. Now a close above 17.50 is required before signaling the pullback has ended.
30-year Treasury Jun Contract (US, ETF: (TLT))
Ranging choppily around Tuesday’s 164-10 high did not reject the trending that is targeting 165-06. But it also created a pattern whose bearish resolution is likely to begin by gapping down. So, avoiding a gap down keeps in-play 165-06.
Crude Oil Jun Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Tuesday’s probe under the 43.85 sell signal was likelier to be rejected than to extend down. But gapping up to the 44.50 buy signal proved too optimistic to withstand the morning’s EIA report. Its reaction back down to Tuesday’s 43.25 lows isn’t any likelier to extend down while unfinished business above remains outstanding at a new high close. but it is as vulnerable to break lower first.
Natural Gas Jun Contract (NG, ETF: (UNG, UNL))
Rather than first dipping to fill the gap back down to Monday’s 2.03 close, Wednesday’s open gapped up to test 2.14 resistance. Like Tuesday’s gap up to 2.07, the balance of the session only ranged narrowly sideways. Filling the gap would help to clear the way for a durable rally, which would otherwise be signaled by closing above 2.22. Thursday’s EIA report is not being greeted from an optimal position of strength.
Mid-day Update… Getting comfortable with the depth.
Look out below if that comfort level is finally reached.
Deep sea divers know the risks of descending too quickly too deeply. The inverse can be true, too. We last saw that on Monday, when the gap up pointed the session higher, but trending didn’t begin until the morning’s choppiness had ended.
Has this morning’s choppiness ended? The noon hour’s exit touched the 2041.00 low where the morning’s bias environment began lapsing. Retracing it proves the noon hour’s bounce was “ineffectual optimism.” Both lows stopped 1 tick short of touching overnight lows, optimism that is potentially bearish from a contrarian perspective.
If tested, the 2049.75 bias-up signal should define the bias environment’s upper-end. Back above 2045.00 would signal some bounce is underway. But back under 2042.00 would signal a new downleg underway. Before 1:30 a break under 2042.00 would invalidate the afternoon’s no-bias signal. After 1:30 a break under 2042.00 would be no-bias trending requiring a retracement.
Sideways ranging until the bias environment begins lapsing would leave the final hour vulnerable to trending down sharply.