S&P
The First Trade… Two steps forward, one step back.
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…
Monday’s recovery of Sunday night’s slide had probed fresh highs by a 2-3 point margin. Despite that coming very late, a last-minute dip ended the day 2-3 points into negative territory. No traction was gained by the intraday rally, and Friday’s breakout was not confirmed, two elements of “ineffectual optimism.”
Overnight action’s new info…
Narrow ranging at Monday’s close eventually began sliding. Ranging narrowly again at what is this morning’s 2004.00 bias-down signal eventually broke lower to range around this morning’s 1998.50 bias-down target. Probing its lower-end down to 1996.50 has snapped back up into the range.
If, then…
We began monitoring a topping pattern last Saturday. It defined intraday action until Friday’s overnight rally and gap up to fresh highs. Was Friday an exception, or the new rule? Monday’s session somewhat validated by not rejecting it. But not confirming Friday’s breakout leaves the door open to rejecting it. Of course, the burden of proof is greater for its delay. Yesterday’s ineffectual optimism in S&Ps offers more evidence. An index comparison offers more evidence, in that only the Dow has extended to fresh highs for two consecutive days, while NDX has only now closed above its prior high. S&Ps opening under Friday’s lows (as is indicated overnight) would not be required to fill the gap back to Monday’s high. Last week’s intraday dips only trapped shorts whose squeeze fueled Friday’s breakout. Similarly, absorbing this morning’s gap down would trap more shorts for another squeeze to fuel the rally.
First Trade…
Exiting the open at 9:45 under 1995.00 would be likely also not to recover the 1998.50 bias-down target by 10:15, renewing the bias-down signal. Exiting the open at 9:45 above 2001.50 would be likelier to hold the bias-down target through 10:15, and to avoid renewing bias-down. Exiting the open above 2007.50 would be unlikely to trigger the 2004.00 bias-down signal.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2024.25 | 2014.25 |
| …would target | 2030.00 | 2020.00 |
| Bias-down: under | 2014.00 | 2004.00 |
| …would target | 2008.50 | 1998.50 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET MET | 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)
Monday’s sloppy, choppy session probed above Friday’s high but didn’t close higher. The breakout is not confirmed. Meanwhile, buyers gained no traction for recovering from the gap down. And the close reacted back down into the range. Tuesday can try the same rejection of Friday’s range that could have been tried Monday. But it would be much less capable of reversing the trend after not quickly rejecting Friday.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.
Pre-close View… Defining moment.
Probing fresh highs, with almost no momentum.
Having gapped down in an uptrend, this afternoon’s probe above Friday’s ~2013.00 high creates the basis for a bearish setup. Bearish, if it’s exploited, when the simpler path is to extend higher.
Exploiting the bearish setup would reverse back down to close under this morning’s 2002.00 low. The resulting setup would be a “Pivot Reversal,” which tends to be bearish almost immediately and substantially.
It’s getting late for reversing down. A drop would have to be apparent very soon, if not already. In fact, the last half-hour is being greeted at yet another post-open high at 2015.00.
The prevailing trend always gets a benefit of the doubt. But don’t be too dismissive of a sudden reversal back under 2011.00 during the Position-Squaring window that’s about to open.
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))
Gapping up Sunday night to test Friday’s high was retraced overnight. At least a probe above Thursday’s 1.2200 high remains likely before signaling a reversal down back under 1.1105.
Gold Apr Contract (GC, ETF: (GLD))
Friday’s post-close dip under the 1260.20 pullback limit extended down through Monday morning to test 1243.00. Unless recovered immediately Tuesday back above 1260.20, a deeper pullback targeting the 1217.00 area is likely.
Silver May Contract (SI, ETF: (SLV))
Surging through Monday’s open to 15.85 was retraced entirely and then reversed into negative territory by noon attacking 12.40. There is no unfinished business above, but still room down to 12.25 before signaling a deeper pullback underway.
30-year Treasury Jun Contract (US, ETF: (TLT))
Sunday night’s fresh lows were still 2 ticks above the 160-28 preference, but Monday reversed into positive territory nonetheless. Closing higher Tuesday would confirm a bottom is in, and above 162-07 would trigger a new upleg.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Trending down Sunday night and Monday morning probed the 37.90 pullback limit and spent the session hovering at the 37.00 sell signal, whose break would begin to suggest a deeper downleg underway..
Natural Gas Apr Contract (NG, ETF: (UNG, UNL))
Monday’s weaker open was recovered to retest Friday’s 1.86 high, but not aggressively which suggests optimism remains well in reserve.