S&P
The First Trade… A lot of forks in this road.
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…
Piercing Tuesday night”s fresh high 2107.50 by 1 tick Wednesday morning expended the day”s selling pressure Ranging narrowly around unchanged through two timing windows waited for the afternoon”s bias environment to begin lapsing. Then a 10-point plunge touched 2095.00, which was recovered to end the day essentially unchanged. Oversold RSIs were left outstanding at the low. WedEX did not trigger.
Overnight action”s new info…
The plunge”s recovery soon extended to probe fresh highs at 2108.50. A shallow pullback soon resumed the rally, most recently touching 2113.50.
If, then…
Monday”s confirmed breakout was either going to begin a correction Wednesday, or else extend relentlessly to fulfill its target of new highs. Wednesday afternoon”s plunge had the opportunity to be that correction”s beginning. Completely retracing the plunge had extra opportunity to start that correction, having neutralized the plunge”s oversold condition while leaving unfinished business below at the low”s oversold RSIs. Yet, the rally soon resumed and extended to fresh highs overnight. Thursday”s gap up (currently indicated, with Draghi yet to speak this morning) will be the last opportunity to initiate a corrective dip through Friday morning — more unfinished business would be left outstanding above, with both a new opening gap up and a late bullish WedEX signal. Otherwise, not yet reversing down this morning could extend the trend through Monday”s open.
First Trade…
Exiting the open at 9:45 above 2115.00 would be likely also to exceed the 2111.00 bias-up target through 10:15 to renew the bias-up signal. Exiting the open above 2108.50 would be likely also at least to trigger the 2107.25 bias-up signal. Exiting the open under 2104.00 would be unlikely to trigger bias-up.
Wednesday afternoon”s 10-point plunge almost
Wednesday afternoon”s 10-point plunge almost did what the morning could have done, trap shorts to fuel the rally”s resumption. But being later, the plunge needed to be deeper to be relevant. Instead, completely retracing it into the close left no bullish consequence outstanding for Thursday. The corrective dip can extend lower.
Unless it”s not extending lower immediately by gapping down. Regardless of the 2095 low”s oversold RSIs that require a retest, the rally can resume without delay Thursday by maintaining a gap up above the 2105.50 area. New highs would be in-play, perhaps by Thursday”s close.
As for the WedEX, the morning”s temporary fresh high was the basis for a bearish signal. But its reaction down was never so relevant as to reject the temporary fresh high. Gapping down sufficiently at Thursday”s open could serve by proxy. But there is otherwise no WedEX signal.
Here”s more detail and other markets coverage in the post-market Wrap:
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Morning bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2114.50 | 2107.25 |
| …would target | 2118.00 | 2111.00 |
| Bias-down: under | 2105.25 | 2098.25 |
| …would target | 2100.50 | 2093.25 |
| Signal status: BIAS-UP, BIAS-UP TARGET MET | 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.
Pre-close view… Revolving trap door.
Vulnerability to retracing reappears.
The late-morning touch of 2107.75 barely pierced the overnight high. Another 3 ticks higher would have been optimal for reacting down. The bias-up signal had not been triggered nor was it touched. Trending down would be difficult without first stretching the rubber band higher.
The passage of time has had a similar effect. Ranging narrowly between 2102.00-2105.00 through the noon hour wasn”t unusual. Actually narrowing the range through the bias environment was unusual. Its exit plunged 9 points to 2095.00.
The drop had potential down to 2097.50, which is clearly fulfilled. Oversold RSIs at the low make a premature recovery attempt suspicious — including the current bounce back up to 2099.00.
Until the low is retested, the bounce could reach 2101.00 before suggesting the rally has resumed. Meanwhile, testing fresh lows and recovering back above 2097.50 would start to signal momentum reversing up.
Daily Spot… Absorbing Yellen.
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))
The drop extended through Wednesday”s open to fill the gap back down to last Tuesday”s actual 1.0935 open. Already trying to firm or to bounce is impatient optimism, and not likely to end the decline — although closing back above 1.1000 would be credible for reversing momentum up.
Gold Aug Contract (GC, ETF: (GLD))
Fresh lows Wednesday morning probed 1144.00 support, with potential for extending down to 1137.00 so long as bounces hold 1151.00 as resistance. Closing above 1158.50 would signal the decline”s momentum had lapsed and was probably also reversing back up.
Silver Sep Contract (SI, ETF: (SLV))
A fresh reaction low Wednesday morning extended down to test 15.00 as support, which should be the maximum consequence to having tried prematurely to recover 15.35-15.45 resistance. Closing under 14.90 would suggest a deeper pullback underway.
30-year Treasury Sep Contract (US, ETF: (TLT))
Rallying on Yellen”s testimony without yet probing a fresh low left only 150-24 resistance as a buy signal. It was tested Wednesday to 150-30, and closing back under 150-08 would signal fresh lows in-play to at least 149-08.
Crude Oil Aug Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Sideways ranging became flat-to-lower ranging Wednesday. Instead of launching a rally, at least a fresh low targeting 48.00 has become increasingly likely.
Natural Gas Aug Contract (NG, ETF: (UNG, UNL))
Wednesday”s pre-open rally was already neutralizing the attraction back up to Tuesday”s 2.91 gap up. The balance of the session ranged narrowly at the high, not rejecting the filled gap — greeting Thursday”s EIA report from a position of strength.