S&P
Pre-market Tour (recording & summary)
Fresh lows down to 2020.75 are consolidating pre-open around yesterday morning’s 2022.00-2023.00 lows. The resolution to their post-open test would establish direction for the balance of the morning.
Details and other markets coverage are discussed in the pre-market Tour recording here.
The First Trade… Sellers starting early.
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…
Sunday night’s rally hadn’t skipped a beat since Thursday’s pre-Easter weekend close, extending the intraday rally to attack 2040.00. That was retraced entirely before Monday’s open, which the morning extended back down to 2022.00, retracing 61.8% of the rally from Thursday morning’s 2012.00 low. No relevant supports were broken, but sellers weren’t trapped. Bouncing to 2034.00 during the afternoon’s no-bias environment was retraced to 2027.00, closing back under Thursday’s highs.
Overnight action’s new info…
Relatively narrow choppy ranging back to 2033.50 suddenly launched a drop down to 2023.50. It might be in reaction to a plane hijacking, which it being reported as a domestic dispute. RSIs diverged into the low, but the drop seems pretty slow retracing since learning the hijacking is confined.
If, then…
With no unfinished business above, the open has little excuse to further delay resuming the pullback begun off of last week’s highs. A “session-long decline” setup isn’t possible, but gapping down under yesterday morning’s lows would likely set a bearish tone for the day. By the same token, threatening to gap down, but avoiding it anyway, should at least retest Sunday night’s high.
First Trade…
Exiting the open at 9:45 above 2027.00 would be unlikely to trigger the 2024.50 bias-down signal at 10:15. Exiting the open under 2022.00 would be likely to trigger bias-down.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2041.50 | 2032.25 |
| …would target | 2046.50 | 2037.25 |
| Bias-down: under | 2033.75 | 2024.50 |
| …would target | 2027.50 | 2018.25 |
| Signal status: noN-BIAS, TESTED BIAS-DOWN SIGNAL | 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.
Pre-close View… Hijacked!
Bearish setup gets distracted by shiny metal object (a gun).
Nothing about this morning’s price action was bullish. A lot of selling pressure had been expended just to probe back into Thursday’s range without actually reversing it. But the bias environment wasn’t exited above any relevant level. The opportunity to trap the morning’s sellers was not exploited.
The noon hour’s bounce tested the afternoon’s bias-up signal. It didn’t trigger. Probing above it anyway was “no-bias trending” that was doomed to failure. It did fail, and price was falling further. Retracing the rest of Thursday’s rally was about to begin.
That’s when a headline crossed about the capitol visitor’s center shooting. Like last week’s Brussels event, it created a distraction from the distributive price action — not additional selling pressure, but selling pressure that the original selling pressure allowed to run its course.
So, the headline reaction has been retraced. Not to a fresh high like Brussels last Tuesday, but that wasn’t required being so much later in the session. The distribution described all day is now free to resume pressuring price back down. A fresh afternoon low today or tomorrow morning would be expected to resume the ongoing pullback.
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 Mar Contract (EC, ETF: (FXE, UUP))
Firming Monday filled Tuesday’s small gap back up to 1.1145 that had been left outstanding during last week’s slide. Closing higher Tuesday would suggest a top is already forming. Otherwise there remains potential for extending the pullback to 1.1150-1.1155.
Gold Apr Contract (GC, ETF: (GLD))
Sunday night’s flash crash to 1206.00 was recovered before the open to regain the 1216.50-1223.00 range intraday. Closing above or below it at this stage would now be likely to extend in that direction.
Silver May Contract (SI, ETF: (SLV))
Monday continued fluctuating narrowly around 14.25, and not forming a pattern with any predictive value either way.
30-year Treasury Jun Contract (US, ETF: (TLT))
Rallying Monday morning tested 163-16 whose recovery would start to signal the bottoming pattern had completed already, still subject to a second consecutive higher confirming close. Back under 162-07 would target fresh lows at 160-28.
Crude Oil May Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Probing above 39.55 Sunday night was erased by Monday’s open, and 39.55 held as resistance to a narrow intraday range. Recovering 39.55 would still target 42.00-42.35.
Natural Gas Apr Contract (NG, ETF: (UNG, UNL))
Firming Monday helped to confirm that Thursday’s softer reaction to the EIA report was not necessarily weakness, and it may have absorbed the last of a corrective dip before resuming the rally targeting 1.99.