S&P
Pre-close View… Coming home to roost.
Delaying a shallow pullback has led to a deeper one.
This morning’s late rally to fresh highs during a no-bias environment was entirely acceptable, since it held a test of the 1953.00 bias-up signal. But the late rally’s origin interrupted a slingshot pattern that usually probes slightly lower before snapping back sharply in the opposite direction.
This morning’s pattern snapped up sharply, without any slingshot. So, we knew it was doomed to failure. But having tested the 1952.00-1953.00 resistance, I gave it credibility for testing Friday’s 1968.75 pre-open high, too.
Nope. Reacting down from 1956.25 through the noon hour had at least attacked the afternoon’s 1948.00 bias-down signal. But bias-down didn’t trigger. Not at 1:20, and neither did fresh lows invalidate no-bias at 1:30. But the slide resumed and now 1933.00 is being attacked.
Oversold RSIs prevent a durable recovery from here. So does a greater potential to retest 1930.00 intraday. Otherwise, no buy signal can trigger under 1941.00.
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))
The ongoing decline started the week by gapping down and extending lower. Testing 1.0865 at its low may allow at least a corrective bounce to test 1.1000, since that’s a 61.8% retracement of the Dec-Jan consolidation. Extending lower anyway would be vulnerable to sliding more sharply.
Gold Apr Contract (GC, ETF: (GLD))
Gapping up Monday to 1227.50 extended through the buy signal but stopped short of reaching its 1242.00 objective, whose recovery would all but target a retest of the 1265.00 prior high.
Silver May Contract (SI, ETF: (SLV))
Flat-to-lower ranging Monday didn’t help to end the extended reaction down, which must still recover 15.15 to suggest a retest of the recent highs is underway.
30-year Treasury Jun Contract (US, ETF: (TLT))
Sunday night’s probing above Friday’s gap-down highs weren’t maintained into Monday’s open, suggesting a narrowly ranging session. Gapping up Tuesday would still qualify for rejecting the dip and resuming the recovery.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Dipping overnight to test 32.50 held the signal but only bounced back into the range, so closing under 32.50 would still qualify for resuming the decline targeting a retest of the lows.
Natural Gas Apr Contract (NG, ETF: (UNG, UNL))
Like Friday, Monday avoided gapping up and forming an Island Reversal pattern, instead gapping down and extending lower. The 3-session setup of unconfirmed breaks suggests that Tuesday won’t confirm Monday’s break as being durable.
Look ahead: Economic Calendar – for Tue Mar 1, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Tuesday’s calendar is busy, but only one item has a reliable track record for influencing price action. That’s ISM, which is especially influential around other industrial reports.
Redbook
8:55 AM ET
PMI Manufacturing Index
9:45 AM ET
*ISM Mfg Index
10:00 AM ET
Construction Spending
10:00 AM ET
4-Week Bill Auction
11:30 AM ET
52-Week Bill Auction
11:30 AM ET
Gallup US ECI
2:00 PM ET
Mid-day Update… Premature evacuation.
Basing resolves up before laying solid groundwork.
Not gapping down had already indicated strong-handed sellers weren’t retaking control this morning. Fresh lows became likelier as buyers further delayed retaking control, too.
The no-bias environment still had room up to its 1953.00 bias-up signal, so long as that defined the range’s upper-end. But its test wasn’t required, and wasn’t even likely.
1953.00 was tested, anyway. Breaking higher well after the open gravitated up to 1952.00, and then surged to 1956.00. The bias environment exit is fluctuating narrowly around 1953.00.
Not gapping down kept the market in Friday’s orbit, attracted back to Friday’s highs and higher. Its 1952.00-1953.00 resistance is now neutralized. Fresh highs would all but target at least 1960.00, if not also fresh highs above 1969.00.
Back under this morning’s 1945.00 open would signal the bounce had ended already.
Afternoon Bias
| MON afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 1968.75 | 1960.00 |
| …would target | 1968.50 | 1966.00 |
| Bias-down: under | 1950.50 | 1948.00 |
| …would target | 1945.50 | 1942.75 |
| Signal status: NO-BIAS | 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.