S&P
Post-open Review… ‘Tis the season of giving back.
Retracement resumes post-open.
The overnight drop back down to 2422.50 had retraced yesterday’s final hour 55-point surge. 
Consolidating there formed an Ascending Triangle, vulnerable to a false break higher that then capitulates lower.
Except, breaking higher and/or capitulating lower would depend on already extending down before the opening 15 minutes of volatility had lapsed.
A post-open blip-up to attack 2446.00 was reacting down by 9:45, and has extended down to 2412.50. Both 1-minute and 3-minute RSIs have avoided oversold territory, suggesting that sellers are being well-rewarded compared to the amount of force they’re exerting. Bias-down has renewed, and although not required, the next likely target is 2406.00.
RSIs not getting oversold means no positive divergences. That didn’t prevent bouncing back up to 2429.00, and violating the current bounce limit. But bounces that originate while RSIs aren’t getting oversold do tend to fail. Back above 2431.00 would start to signal otherwise.
The First Trade & Pre-open Tour Recording… Half the record left.
Proper context can start the day with a solid win and make all the difference.
DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A
Through the prior close…
Monday’s low had fulfilled the decline’s next lower objectives at 2361.00 and 2345.00, but that didn’t prevent Tuesday night’s open from plunging to test 2317.00. It wasn’t a “new Globex trend extreme” requiring intraday retest, and Wednesday’s post-open surged to 2387.00. A reaction down filled the gap back to Monday’s 2352.00 cash session close, which held through the morning. Rallying into the noon hour probed fresh session highs during the afternoon bias environment, which rejected before entering the final hour. More than marginalizing sellers, this setup creates a vulnerability to extend the intraday trend, which it did by adding 55 points to attack 2478.00. That is almost half of yesterday’s net gain.
Overnight action’s new info…
The first reaction to Wednesday’s final hour 55-point surge was to retrace it by 61.8% and attack 2456.00. Consolidating until midnight surged to probe a fresh high up to 2481.50. A brief, fresh high that was soon retraced to 2456.00. Then through it, into and out of Europe’s opens, retracing all of the last 55-point surge back under 2423.00.
If, then… (notes to accompany the Tour recording)
Bending a familiar phrase: What can go up a lot, can go down a lot. Large intraday moves reflect not only an oversold or overbought condition, but also the range for play. Wednesday’s record-setting 161-point rally from Tuesday night’s low reflects the degree of having been oversold, and the room for noise. It also rewarded buyers for absorbing sellers, apparently too much, too soon, to be maintained. Wednesday’s last intraday upleg was no different in principle than Sunday night or Tuesday night’s opening plunges which created extremes. Some degree of pullback was likely since trend reversals aren’t signaled by the same session that contains a prior trend’s extreme — and a resuming the decline is still possible since yesterday’s rally doesn’t yet qualify as a trend reversal. And there’s still room up to 2525.00 and 2607.00 without yet qualifying as more than a temporary correction that resumes the decline. Meanwhile, Wednesday was day-9 of what may be an Up/Down-Crash setup forming, which can be disqualified by a second consecutive up-day today. Regardless, I’m still reluctant to pronounce a bottom forming without there first being a capitulative session, or two.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2440.25 would be unlikely to recover the 2448.25 bias-down target at 10:15, which would renew the bias-down signal. Exiting the open above 2461.00 would be unlikely to trigger the 2454.25 bias-down signal at 10:15.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2473.25 | 2474.25 |
| …would target | 2483.50 | 2484.25 |
| Bias-down: under | 2453.75 | 2454.25 |
| …would target | 2447.75 | 2448.25 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET EXCEEDED | . | |
| BIAS VIDEOS… INTRO // EXAMPLE | ||
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.
Market Wrap (recording & summary)
There’s no unfinished business below.
- Monday’s low had fulfilled the decline’s next lower objectives at 2361.00 and 2345.00.
- Tuesday night’s opening plunge testing 2317.00 didn’t qualify as being a “new Globex trend extreme” requiring intraday retest, due to the singular nature of its leg, and its later retest holding the noise range.
- Wednesday’s post-open surge to 2387.00 reacted down and filled the gap back to Monday’s 2352.00 cash session close, neutralizing its attraction.
- Holding tests of both morning bias-up parameters overcame the rejection by entering the noon hour above its 2372.50 bias-up target.
Two intraday behaviors signaled that buyers were stronger-handed than sellers:
- Monday’s 2352.00 cash session close held a test through Wednesday’s post-open dip, and another before the bias environment began lapsing.
- Printing fresh session highs during the afternoon bias environment wasn’t reversed back under a prior low before entering the final hour.
Does Wednesday’s 161-point rally from Tuesday night’s low already reward buyers for absorbing sellers? Too much, too soon, to extend higher immediately? Regardless of the upside vulnerability that facilitated it, Wednesday’s last intraday upleg is no different in principle than Sunday night or Tuesday night’s opening plunges which created extremes. And Wednesday is the first session gain for the decline beginning Dec 13, day-9 of what may be an Up/Down-Crash setup that would be timed to resolve this week.
Closing positive Thursday would at least invalidate the Up/Down-Crash setup. But this bounce has room up to 2525.00 and 2607.00 without yet qualifying as more than a temporary correction. I’m still reluctant to pronounce a bottom forming without there first being a capitulative session. Or, two — and Wednesday’s rally doesn’t limit this week’s vulnerability to that.
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 Mar Contract (EC, ETF: (FXE, UUP))
Gapping down Wednesday was recovered at least to fill the gap back to Monday’s 1.1500 close, but reversing down slid to fresh lows, testing a last sleeper support under 1.1430.
Gold Feb Contract (GC, ETF: (GLD))
Gapping up Wednesday and extending to fresh highs above 1282.00 was retraced to test unchanged at 1272.50. Holding its test would keep alive upside momentum.
Silver Mar Contract (SI, ETF: (SLV))
Wednesday’s open compensated for the larger delay in extending higher by gapping up above all ~14.90 prior highs and trending up sharply to 15.25.
30-year Treasury Mar Contract (US, ETF: (TLT))
Fresh highs overnight retested Thursday’s 146-00 high before it became clear there was no near-term need for a flight-to-safety. A deeper retracement formed Wednesday morning after gapping down and sliding to 144-26. Closing any lower would suggest a top is forming.
Crude Oil Feb Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
While no bottom can be durable at this stage of the patter, Wednesday’s gap up extended sharply higher through the morning to test Friday’s 42.65 higher prior lows. Regardless of the bounce, Thursday’s EIA report is not being greeted from a position of strength.
Natural Gas Jan Contract (NG, ETF: (UNG, UNL))
Overnight lows fulfilled the 3.33 target before bouncing Wednesday into positive territory testing 3.58. Thursday’s EIA report is not being greeted from a position of strength.