S&P
Post-open Review… Deja voodoo.
Overnight rally repeats post open. Will the overnight rally’s failure repeat, too?
The pre-open drop seems to have repeated the decline’s mistakes of yesterday afternoon. It neutralized objectives below at the 1922.75 and 1928.50 bias-down parameters. And it did so by plunging aggressively after already having dropped 30 points from the overnight high. Capitulation without any lower attractions made it easier for price to rise, simply for lack of selling.
The open’s surge to attack 1937.00 was retraced to 1925.00 before resuming the rally. But the 1928.50 bias-down was recovered through its grace period, putting into play an offsetting test of the 1939.50 bias-up signal. That extended to the 1945.50 bias-up target.
Rallying 20 points in 45 minutes resembled the overnight rally. Exploiting the same conditions that the overnight rally had exploited. So, will the overnight rally’s failure repeat, too?
Already, the rally has retraced 13 points down to 1931.50. That’s testing yesterday’s 1931.00 cash session close. And that’s natural support.
So, it’s likely that one or the other is done, either sellers or the corrective bounce. Back above the open’s 1937.00 resistance would make the recovery credible for extending higher. But back under this morning’s 1928.50 bias-down signal could unleash new lows.
Pre-market Wrap… More lemons from lemonade.
The overnight rally to 1957.75 had been retraced already to probe negative territory under 1931.00-1933.50. Then it extended down to 1919.00, fresh lows under 1926.50 and 1924.00 (yesterday’s low and the overnight low, respectively). That also tested this morning’s 1922.75 bias-down target.
Before getting too bearish on all of that, let’s note that its reaction up has threatened the 1928.50 bias-down signal. Not holding 1926.50 through 9:45 would make it likely to trigger 30 minutes later at 10:15. So, recovering 1926.50 through 9:45 should be take seriously for its potential to rally sharply through the morning.
There’s nothing bullish about triggering bias-down. Details and other markets coverage were discussed during the pre-market Tour, recorded here:
https://roddavid10.mitel-nhwc.com/join/fbkymwy
The First Trade… Stop blinking, you’re missing it.
Proper context can start the day with a solid win and make all the difference.
CHARTROOM LINK(s)
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(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
(Values have been updated to Dec pricing, which becomes the front-month at this morning’s open) Gapping up Wednesday to 1977.00 resistance couldn’t resume the overnight rally, but easily retraced it, and by a 2-point margin down to 1956.25 through the morning bias environment’s exit. A noon hour bounce to 1965.00 was obviously weak-handed resolved down to 1941.00 through the afternoon bias environment’s exit. That neutralized unfinished business outstanding from Tuesday, but wait, there’s more… Another downleg plunged to 1926.25, essentially turning a 29-point rally into a 29-point loss.
Overnight action’s new info…
A relatively slightly lower low at 1924.00 couldn’t attract sponsorship to resume the decline, and prices firmed into and out of midnight. The firming accelerated and extended to test 1947.00 into Europe’s opens. Then things got interesting… A plunge to 1933.50 was soon recovered to fresh highs attacking 1958.00 — which is interesting enough, but that surge has been retraced entirely and then some back down to 1932.00, probing under yesterday’s close.
If, then…
My premise at yesterday’s close was that sellers were most vulnerable. After neutralizing downside attractions, the decline not only extended but plunged, at a time when extreme sentiment tends to be a sentiment extreme, i.e. capitulation. And that still didn’t put into play any lower objectives, since sellers didn’t gain traction for their effort — only the bias environment exit was under its prior timing window’s low. So, did the overnight rally fulfill that premise and neutralize it? Its peak was a 61.8% retracement of yesterday’s intraday drop, which qualifies it as a correction. But that was overnight, and its retracement does allow the intraday crowd a bite at that apple. They’ll have to greet the open already in rally mode to prevent the latest overnight leg from gaining its own traction and resuming yesterday’s drop.
First Trade…
Exiting the open at 9:45 above 1941.25 would be likely also to trigger the 1939.50 bias-up signal at 10:15. Exiting the open under 1935.00 would be unlikely to trigger bias-up. Exiting the open under 1926.50 would be likely to trigger the 1928.50 bias-down signal at 10:15.
Morning bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1950.00 | 1939.50 |
| …would target | 1955.75 | 1945.50 |
| Bias-down: under | 1938.75 | 1928.50 |
| …would target | 1932.25 | 1922.75 |
| Signal status: LATE NO-BIAS, TESTED BIAS-DOWN SIGNAL | 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
Wednesday’s decline wasn’t satisfied just to retrace Tuesday’s 1952.25 no-bias trending origin and its 1:20 print at 1948.50. The last half-hour slid 24 points to 1935.50.
That’s a lot of selling pressure. Not just its depth, which widened an already wider range than the two prior sessions. But also its slope, which was rushing for the exits faster than any other of Wednesday’s timing windows.
That relentless and substantial momentum may be the most bullish element to leave Wednesday’s session. The drop neutralized attractions below without creating new ones, while sentiment was extreme. Not extending down Thursday would be bullish — but preferably while also gapping open back above 1948.50-1952.25 (basis Sep, 1939.75-1943.00 basis Dec).
Extending down anyway without being required and without unfinished business above outstanding would suggest the decline has something in mind more substantial, and lower. Details and other markets coverage are in the post-market Wrap recording here.
After 6:30pm ET, use these links to monitor overnight Globex trading:
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