S&P
Post-open Review… Well-managed surprise.
Yellen’s pre-open release kept something on the table.
It wasn’t just scraps, but it’s now gone, nonetheless.
The pre-open test of 1857.25 support was retested post-open down to the 1855.50 bias-up signal. Its support held, and the 1861.25 bias-up target was exceeded through 10:15 to renew the bias-up signal.
Friday’s “higher prior lows” around 1868.00 had not been tested post-open. But now overnight highs have been exceeded up to 1877.75.
Several fibonacci extensions clustered there to trigger my warning in the chaRTroom that a pullback had become likely. It had no particular expectations, whether shallow or deep, but it has proved to be the latter. Its 16-point reaction is testing 1859.40.
Meanwhile, the pre-open cooler from Yellen that was bullish from a contrarian perspective has been fulfilled. Even the gaps back up to Friday’s 1873.25 and 1875.50 closes have been filled.
Extending higher to 1881.00 and 1888.00 is not assured, but at least a bounce to 1868.00 is somewhat likely. Exiting the bias environment at 11:30 back under its 1861.25 bias-up target would undermine the upside momentum. Under the 1855.50 bias-up signal could reverse it down.
In case you haven’t yet grabbed it off the blog, here’s the link to this morning’s pre-market Tour.
Pre-market Tour (recording & summary)
For only the second time that I can recall, Yellen lifted the embargo on this morning’s 10:00am opening remarks much earlier. Last time was at 8:30am, causing the market to scramble. This time was much earlier, in time to prevent the overnight rally’s latest breakout from extending. In fact, fresh highs at 1872.00 were already retracing, and then plunged to 1859.00. That’s been retested down to 1856.00.
Did that last dip subdue optimism, like yesterday’s last reaction down, which was bullish from a contrarian perspective? We’ll know soon, especially if 1857.25 holds as support through the open. Otherwise, there’s room down to yesterday’s 1856.50 “lower prior highs” and a little lower before reversing momentum back down more durably.
Details and other markets coverage are discussed in the pre-market Tour recording here.
The First Trade… Out of the frying pan.
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…
Already retracing Monday’s late rally before Tuesday’s close, the attraction below had been neutralized. It was a pretty big rally, and so a big retracement. And there were many other big rallies and retracements throughout the day. The last rally was big, and gained a little traction, but it was retraced just enough to close back within the day’s wide range — leaving overbought RSIs outstanding at its 1863.75 high.
Overnight action’s new info…
Room for extending the Tuesday’s late pullback to 1840.00 was exploited down to 1838,50. Twice. Already rallying into Europe’s opens, only a blip-down had to be absorbed before surging to 1870.50. the surge is being consolidated back down to 1864.50
If, then…
The next higher objective put into play yesterday afternoon was a test of Friday afternoon’s 1868.00 “higher prior lows.” Done. The only challenge now is the same challenge as at yesterday’s open — already having fulfilled its upside attraction. The gap back to Friday’s 1873.25 and 1875,50 closes could be filled, too. It’s not required, but the potential may be enough to encourage extending the rally to test 1881.00 and 1888.00. Fed Chair Yellen’s congressional testimony may also be a challenge, or an accomplice.
First Trade…
Exiting the open at 9:45 back under 1856.50 would be unlikely to exceed the 1861.25 bias-up target at 10:15. Bias signals are otherwise well out of range currently.
Morning Bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1861.25 | 1855.50 |
| …would target | 1867.00 | 1861.25 |
| Bias-down: under | 1845.50 | 1840.00 |
| …would target | 1838.50 | 1833.00 |
| Signal status: BIAS-UP, BIAS-UP TARGET EXCEEDED | 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)
Attacking either end of the range again was likely to probe beyond it. The range’s upper-end was the lucky recipient of that attention, Its 1856.50 highs were broken on the way up to attacking 1864.00.
Lest that sound the decline’s all-clear, a late reaction down attacked 1844.00. Tuesday’s super-volatile session was super volatile into its last 20-point drop.
Gapping up Wednesday above Tuesday’s late high would target Friday’s higher prior lows around 1868.00, and probably higher to also test 1888.00. Otherwise, opening under 1840.00 could find the decline having resumed before Fed Chair Yellen clears her throat during her congressional testimony.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.