S&P
Post-open Review… Putting it off for later.
Resuming the rally immediately post-open would have been credible for extending higher throughout the morning. Backing-and filling to lower levels was unlikely to begin quickly. Ranging around the 1986.00 open barely managed an errant tick above 1987.25 before reversing down sharply.
The reversal down extended. And extended. Despite having probed it overnight by 16 points, this morning’s 19676.25 bias-up target was being tested as support at 10:15. The bias-up signal was not renewed. And now the 1968.50 bias-up signal is being tested as support by 1 point.
Yesterday’s gap up reacted down, too, but held well above the prior session’s range. This morning’s reaction down has tested yesterday’s highs. Can today’s reaction down still recover to probe the 1992.00 overnight high like yesterday? That’s still the premise, since yesterday’s buyers gained traction for their effort.
And now rewarding them this morning makes an afternoon reward likely. Exiting the bias environment under this morning’s 1968.50 bias-up signal would invalidate that reward.
Pre-market Tour… Pay them now, or pay them later.
Consolidation off of the 1992.00 overnight high is still ranging several points either way around 1986.00. Resuming the rally post-open without delay would be credible for extending to fresh highs at 1996.00. A corrective dip is unlikely, but would likely recover this afternoon since the overnight rally — no matter how large — doesn’t qualify as rewarding yesterday afternoon’s buyers. Details and other markets coverage were discussed during the pre-market Tour recorded here:
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The First Trade… Putting the “bigger” into bigger picture.
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…
Tuesday’s gap up to 1952.00 greeted the holiday-shortened week with extreme sentiment. That became a sentiment extreme that required dipping to 1944.00… which the morning promptly fulfilled. Having offset the earlier optimism with a quick dose of pessimism, the rally resumed gradually. Buyers gained traction by exiting the bias environment above the noon hour’s high and entering the final hour higher. The rally extended through the 1961.00 overnight high to 1968.75, closing under the session’s 1967.25 target.
Overnight action’s new info…
The rally soon resumed overnight and extended relentlessly to 1987.50 into Europe’s opens. Trying to resume the rally surged to 1992.00, only to react down to 1982.00. Now 1987.50 is being retested.
If, then…
Yesterday afternoon’s buyers had gained traction, but were already rewarded by then fulfilling the session’s 1967.25 target without closing above it. Not extending higher overnight would have meant reversing down sharply this morning. Having extended higher overnight — no matter how substantially — the rally should be immune to reversing down. This morning’s bias environment is likely to trend even higher, but pulling back instead would then be likely to recover and extend higher this afternoon.
First Trade…
Exiting the open at 9:45 above 1981.50 would be likely also to exceed the 1976.50 bias-up target through 10:15 to renew the bias-up signal, next targeting 1986.00. Exiting the open above 1986.00 would be likely to further renew the signal, next targeting 1996.00. Exiting the open under 1973.00 would be unlikely to recover 1976.50 through 10:15.
Morning bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 1970.50 | 1968.50 |
| …would target | 1978.25 | 1976.25 |
| Bias-down: under | 1961.25 | 1959.25 |
| …would target | 1956.00 | 1954.00 |
| 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… skipping a beat
Pre-open action — both the powerful rally to 1961.00 and its late reaction down testing 1952.00 — had kept alive potential for extending higher to 1963.25 and 1967.25. But Tuesday ultimately couldn’t escape that greeting the new week with extreme sentiment does often prove to be a sentiment extreme.
Actually, Tuesday ultimately overcame the sentiment extreme. The consequence was a pullback testing 1944.00. It was touched at the morning’s low, offsetting the pre-open optimism with pessimism. The balance of the session rallied to fresh highs at 1968.25.
The intraday dip does suggest the rally may extend even higher than its 1967.25 objective to compensate for the delay. Suggesting against that is the target, which having been met, was never exceeded to put into play any higher level. Beware Wednesday’s session if Tuesday’s rally doesn’t extend higher overnight — regardless of Tuesday afternoon’s buyers having gained traction for their effort.
More detail, including discussion of the potential for a “session-long decline,” are described in the post-market Wrap recorded here:
https://roddavid10.mitel-nhwc.com/join/tyfpcyk
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