S&P
Post-open Review… Flat-to-lower.
The rally isn’t resuming, and barely reversing.
A pre-open dip to fresh overnight lows pierced this morning’s 2807.75 bias-down signal, then bounced to greet the open unchanged at 2812.00. A blip-up to 2814.00 was all the post-open strength that could be mustered. There was no gap up, or even a touch of yesterday’s highs.
Reacting back down then slowly ground lower into negative territory. The bias-down signal was probed by 1 point in time to invoke the grace period. It ultimately held to trigger “late no-bias.” And having held a test of the bias-down signal, an offsetting test of the 2816.00 bias-up signal is in-play.
There hasn’t yet been any new strength above the pre-10:15 high. Without it, the late bias signal can be invalidated by exiting the bias environment under its 2807.75 bias-down signal — which is still being tested.
Exiting the bias environment above 2807.75 would make the 2816.00 objective become “unfinished business above.” Back above 2811.25 would trigger an upleg targeting fresh session highs. And probably also probe 2816.00.
The First Trade & Pre-open Tour Recording… Hovering at the highs.
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…
Target-to-target; we don’t see these sessions often. Monday night’s drop to test 2790.00 was essentially the morning’s bias-down target. Its reaction into and out of the open avoided triggering the bias-down signal, putting into play an offsetting test of its bias-up signal. The morning’s momentum persisted through the noon hour to trigger the afternoon’s bias-up signal, whose 2816.75 target was fulfilled to within 4 ticks at session highs. That also represented the room for noise above the rally’s 2813.00 objective. The close was back under it, but still above the 2809.00 objective whose Sunday night test had held.
Overnight action’s new info…
Closing back under the intraday test of 2813.00-2816.75 robs the rally of its momentum, but doesn’t reverse it which had required closing under 2809.00. This is now exemplified by the overnight sideways range. Attacking 2810.00 into Tuesday’s close was soon recovered to pierce fresh highs to within 1 tick of 2816.75. Gradually reacting down since then has again attacked 2810.00. .
If, then…
Having lost its momentum, resuming the rally Wednesday morning all but requires gapping up. Not gapping up doesn’t necessarily default to reversing down. But reversing down is likelier if not gapping up, and makes intraday rally efforts likely to fail. Meanwhile, this is day-two of the Fed Chair’s congressional testimony. It rarely duplicates day-one. Price action already discounts comments as if they’ll be repeated the second day. Often, the Fed Chair walks-back various comments that were misinterpreted or overly discounted. All of which will make for an interesting WedEX reading at the close.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2818.00 would be likely to trigger the 2816.00 bias-up signal at 10:15. Exiting the open under 2813.00 would be unlikely to trigger bias-up. Exiting the open above 2810.00 would be unlikely to trigger the 2807.75 bias-down signal.
Morning Bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2814.50 | 2816.00 |
| …would target | 2821.75 | 2823.25 |
| Bias-down: under | 2806.00 | 2807.75 |
| …would target | 2798.25 | 2800.00 |
| Signal status: LATE NO-BIAS, TESTED BIAS-DOWN SIGNAL | FAQ | |
| Flowcharts: Bias-UP // Bias-DN 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.
Market Wrap (recording & summary)
Testing the rally’s 2809.00 target Sunday night would have sufficed for fulfilling it, if Monday had reversed momentum down. But an intraday test of the target remained in-play otherwise. And potential for probing higher objectives at 2813.00-2816.75 remained intact, too.
But Monday’s closing action had narrowly avoided triggering a hold-short setup. So, Tuesday was no more likely to trend up than to reverse down. It reversed down, probably less from NFLX and AMZN technical glitches and much more so due to Fed Chair Powell’s day-one congressional testimony. (NFLX and AMZN recovering intraday didn’t hurt, although NFLX bounced only to its resistance at the sell signal identified during this weekend’s Saturday Review.)
Speaking of the Fed… Day-two of the Fed Chair’s congressional testimony rarely duplicates day-one. Comments are already discounted by the second day, including anticipation for the second day to follow-through. More often, the Fed Chair walks-back various comments that were misinterpreted or overly discounted.
Anyway, dipping overnight to within 2 ticks of the morning’s 2789.25 bias-down target got a lot of selling pressure out of the system. Recovering the bias-down signal in time to avoid triggering then put into play 2803.50. And triggering the afternoon’s bias-up put into play 2816.75.
The afternoon’s bias-up target was met to within 4 ticks at session highs, while at least 1-minute RSI diverged negatively. Its reaction down closed back under 2813.00. Closing under 2809.00 after probing 2813.00 would have reversed momentum down. It hasn’t, but probably will if the rally’s momentum isn’t restored immediately Wednesday. Which will be interesting as the WedEX setup forms into the close.
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 Sep Contract (EC, ETF: (FXE, UUP))
Tuesday’s shallow dip had nevertheless held a relevant support at 1.1740 before recovering to attack the morning’s high. But it still needed a second consecutive higher confirming close. Which didn’t come, as Tuesday morning trended back down to and through Friday’s close to attack 1.1700.
Gold Aug Contract (GC, ETF: (GLD))
An overnight rally held the 1245.50 bounce limit but still gapped up slightly above Monday’s 1240.00 close. Then price plunged back through the decline’s 1237.50 target to fresh lows testing 1226.00. After Monday’s low had neutralized the “unfinished business below” at Friday’s opening gap down, there was no bullish reason for any further weakness, enabling Tuesday’s sizeable reaction.
Silver Sep Contract (SI, ETF: (SLV))
Tuesday’s gap down back to Friday’s shallow low proved that previous bottoming attempts were ‘ineffectually optimistic” as the morning slid sharply to attack 15.55.
30-year Treasury Sep Contract (US, ETF: (TLT))
If Monday’s probe under the channel’s 145-02 lower-end were a false break, then Tuesday should have rejected the probe by rallying sharply. But price only hovered, suggesting that Monday’s probe was a warning shot across the bow. Breaking above Monday’s high through Wednesday’s open would be credible for launching another bounce, but at least another downleg has become more likely.
Crude Oil Aug Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Regardless of having fulfilled the confirmed breakout’s minimum objective with Monday’s fresh low close, no buy signal had formed, and Tuesday probed slightly lower lows intraday.. Then it recovered positive territory, albeit only slightly positive, but not confirming the decline’s momentum.
Natural Gas Aug Contract (NG, ETF: (UNG, UNL))
Monday’s choppy bounce had tried extending slightly higher overnight to 2.79, but Monday morning drop to fresh lows at 2.73 essentially proved the decline remains intact. That’s probably not enough consequence for the failed choppy bounce, suggesting that lower lows remain in-play.