S&P
The First Trade… Why was this night different from all other nights?
Proper context can start the day with a solid win and make all the difference.
CHARTROOM LINK(s)
o Win XP-Friendly entry
o non-xp friendly (ilinc)
(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Monday night’s 33-35 point plunge had consolidated just under 1938.00, whose break would put into play 1918.00. Gapping down under it Tuesday didn’t extend down immediately, but eventually, finally testing 1918.00 as the afternoon’s bias environment began. The balance of the afternoon firmed to 1924.50, and then surged to 1935.00, to within 1 point of the open’s highs. The session’s close was flat with its gap down despite having trended down intraday.
Overnight action’s new info…
Initially dipping to 1924.50 had bounced optimistically into China’s PMI, which disappointed. Its reaction plunged 20 points to 2010.50. So, why was this night different from all other nights? (Okay, wrong holiday.) Because rather than extend the plunge, Europe’s opens were greeted by a bounce back up to 1924.50. And a brief bobble there was resolved up through Tuesday’s highs to 1939.00. That’s being consolidated back down to 1932.00.
If, then…
It’s tough to label as “resilient” a market that is down sharply in a week to fresh two-week lows. But Tuesday’s gap down netted nothing for its effort, and now last night’s plunge has been reversed. Reversing a plunge does suggest that bearish fundamentals have become overly-discounted. Even with today’s exodus of many participants thinning volume, early strength could retrace much of Monday night’s plunge fast, too. Meanwhile, lower lows and lower highs still define a downtrend. And a lot of energy has been expended just to test 1938.00 resistance. So, the recovery attempt will be very sorry if not rallying at the open.
First Trade…
Exiting the open at 9:45 above 1941.25 would likely trigger the 1938.25 bias-up signal at 10:15. Exiting the open under 1931.50 would be unlikely to trigger bias-up.
Morning Bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1949.50 | 1938.25 |
| …would target | 1955.75 | 1944.75 |
| Bias-down: under | 1935.00 | 1924.00 |
| …would target | 1927.75 | 1916.50 |
| Signal status: NO-BIAS | 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)
The next lower objective under 1938.00 was 1918.00. Tuesday’s gap down to 1931.00 fluctuated between 1928.50-1936.00 before trending down to the 1918.00 objective. The balance of the afternoon firmed, before a late-afternoon surge up to 1935.00.
That action developed exclusively under last week’s lows. And it satisfied the next lower target’s selling pressure. While closing flat to higher despite the intraday post-open drop. It’s not a buy signal, but it undermines the downside momentum.
Gapping up Wednesday — at least above 1941.00 but probably above 1945.00 — would be attracted higher intraday. Filling the gap(s) at Monday’s 1957.00 and 1963.00 close(s) would be natural, with or without normal volume. Meanwhile, having trended up into the close, gapping down under Tuesday afternoon’s 1918.00 low could form a session-long decline. Tuesday’s “lower prior highs” at 1924.00-1927.00 would try to argue otherwise.
Not gapping up would be difficult to trend at all until late-afternoon. Details and other markets coverage are discussed in the post-market Wrap recording here:
https://roddavid10.mitel-nhwc.com/join/mjzxmtm
This evening, monitor overnight Globex trading in the chaRTroom at:
XP-Friendly || non-xp ilinc
Pre-close View… Island ho?
The bullish scenario emerges.
The 1918.00 objective was barely touched as the afternoon’s bias environment got underway. The bias environment back-and-filled up to 1924.00 repeatedly. The next hour widened its range, but not its action.
Then the last half-hour was finally squeezed. Surging from 1924.00 to 1935.00 is now probing into the open’s range. Closing within it would form a potential Island, and gapping up Wednesday above 1938.00 would seal a near-term low.
Participation will be thin due to Yom Kippur worship. Trending after not gaining traction intraday depends upon gapping open in one direction or the other. Since the break under 1938.00 is ending where it began, its rejection would be more able to trend than would gapping down.
Daily Spot… Reacting to stocks.
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 Sep Contract (EC, ETF: (FXE, UUP))
Friday’s reaction down had extended Monday to form a breakout under uptrending support. Extending lower overnight to gap down Tuesday then also extended down intraday. At least an eventual third lower close is required before the pattern can begin bottoming.
Gold Dec Contract (GC, ETF: (GLD))
Modest firming overnight was rejected sharply into and out of Tuesday’s open to test 1120.50. The pullback limit was violated, so back above 1134.00 is needed to begin signaling the pullback has ended.
Silver Dec Contract (SI, ETF: (SLV))
Gapping down sharply Tuesday from Monday’s overlap of its 15.10 pullback limit spent the day ranging narrowly around 14.65. There is no buy signal.
30-year Treasury Dec Contract (US, ETF: (TLT))
Monday’s pullback to support at 153-12 reacted up sharply to 154-17 Tuesday in a flight-to-quality which extended as stocks fell apart to probe Friday’s high above 156-00. The gap back to Monday’s close should be filled before a durable rally can begin.
Crude Oil Nov Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Gapping down Tuesday to 45.65 failed to confirm Monday’s close above 45.65. Only ranging narrowly prevented any signal from triggering, but the upside continues to be suspect.
Natural Gas Oct Contract (NG, ETF: (UNG, UNL))
Still ranging narrowly under prior lows Tuesday prevents a bottoming pattern from yet forming.