S&P
The First Trade & Pre-open Tour Recording… Lower-end, meet upper-end.
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…
Sunday night’s steady decline from 2728.00 to 2698.50 was retraced 38.2% before the open — not a healthier 68.2%. That much pessimism wasn’t going to trend down intraday unless maintained through the open. A quick probe under the overnight low could have formed a bottom, but an attack on it down to 2700.50 sufficed. The morning snapped back up to attack 2719.00, but from a position of weakness that was likely to retrace 2704.00. Which it did. Its retracement was likely to extend down. Which it didn’t. The balance of the session rallied back into positive territory up to 2728.50.
Overnight action’s new info…
Somewhat similar to Sunday, last night also essentially began with a blip-up that was reversed down. Last night’s blip-up was a little further in, initially surging 8 points to attack 2733.00, then snapping back down more than 11 points to attack 2721.00. Last night’s blip-up was also recovered, retraced into Europe’s opens, and extended to attack 2740.00 as Chinese banks actively supported the Yuan.
If, then…
Was anticipation that China would be forced to step in sooner rather than later responsible for Monday afternoon’s rescue? Or, the mid-week holiday’s volume constraints? Maybe a little of both, but more the latter than the former. In other words, China’s near-term effects on Global markets tend to be retraced. Meanwhile, trending beyond the existing range is difficult around holidays, while trending back to the range’s opposite end is easier. And now, markets are at the recent range’s upper-end, freshly retraced from its lower-end. Trending up today, and not down, probably requires trending up early. Today’s early close only makes breaking beyond the range more difficult. Extending Monday afternoon’s rally intraday was always least likely, and no more likely just for having extended it overnight… Closing Friday under 2718.00 kept alive selling pressure through the weekend. Closing above it Monday would usually require rejecting it Tuesday, but normal requirements are less influential on a shortened session — let alone ahead of a holiday. Nevertheless, trending back down to 2704.00 is still the likeliest objective for any reversal. REMINDER: Today’s early close is at 1:15 PM ET early close. Market Wrap will be held early.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2735.50 would be likely to exceed the 2735.50 bias-up target at 10:15 to renew the bias-up signal, next targeting 2740.75 and 2745.00. Exiting the open above 2733.00 would be likely to trigger the 2730.50 bias-up signal.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2729.00 | 2730.50 |
| …would target | 2734.00 | 2735.50 |
| Bias-down: under | 2719.25 | 2721.00 |
| …would target | 2711.25 | 2713.00 |
| Signal status: BIAS-UP, BIAS-UP TARGET MET | 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)
Holidays impact liquidity, which impacts volatility, because lower volume inhibits participation, and that’s just among the participants that bother showing up, 
while so many other participants are on holiday, which is impacting liquidity. You’ve heard of the Circle of Life? That’s the circle of death.
Or, it can be.
If Monday afternoon’s 24-point rally is any indication, then trending attempts remain possible. Trending within the range, more so than trending beyond it. Like Monday’s recovery from its overnight probe of 22 points under Friday afternoon’s 2720.50 low. That was back TO the range’s lower-end, but not THROUGH it — before reversing 24 points back INTO it up to 2728.50.
And the afternoon rally came from a position of weakness at 2704.00, already retracing the morning’s rally, and now likely to retrace Monday afternoon’s rally. Likely to retrace it Tuesday so long as the open isn’t extending Monday afternoon’s rally, and preferably already trending down.
Extending any higher Tuesday morning wouldn’t be any likelier to retrace last week’s highs. Actually, Tuesday morning’s likely pattern only ranges sideways, still being vulnerable to trending into the 1:15 PM ET early close. [Programming Note: Tuesday’s Market Wrap will be held early.]
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))
Friday’s bounce to 1.1725-1.1745 resistance was retraced Sunday night to gap down Monday to test 1.1670. Extending down even a little would likely extend down to fresh lows under 1.1585-1.1595.
Gold Aug Contract (GC, ETF: (GLD))
Friday’s 1257.00 high was considered a likely candidate for ending the corrective bounce before resuming the decline. Reacting down into the weekend and out of it has probed fresh lows, with lower potential outstanding. Attacking 1240.50 nearly fulfilled 1237.50, which would remain likely so long as 1244.50 now holds bounces.
Silver Sep Contract (SI, ETF: (SLV))
Trending down Sunday night extended to gap down Monday to last week’s 15.95 low and extend to 15.80. The decline’s momentum remains intact so long as bounces now hold 15.87.
30-year Treasury Sep Contract (US, ETF: (TLT))
Volatility is still missing since probing the 144-26 falling trendline that was at first an attraction, and which must now hold as support to avoid another corrective drop.
Crude Oil Aug Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Sunday night’s low retested Thursday night’s low, both lows holding the 72.90 pullback limit that keeps alive the next higher objective at 75.30. So does Monday’s recovery.
Natural Gas Aug Contract (NG, ETF: (UNG, UNL))
There was no bullish reason to close lower Friday, since Thursday’s drop already had filled and held the prior gap. So, Sunday night’s weakness extended down sharply to gap down under multi-week lows down to 2.82. Bounces should hold 2.87 to maintain the breakout’s momentum.
Mid-day Update… Back to square-one.
Post-open rally retraces the opening lows, almost.
The open’s test of 2704.00 wasn’t recovered through 9:45, creating a position of weakness. So, despite rallying to attack 2719.00, sliding into and out of the noon hour has returned to 2704.00. But only to 2704.00.
2704.00 is this afternoon’s bias-down signal, and it didn’t trigger. Not even after invoking the grace period. And now its reaction has bounced to 2711.00, with room up to the afternoon’s 2716.50 bias-up signal.
Back under 2707.50 would signal the decline is resuming, although 2704.00 should hold its test until the window comes within view of lapsing. Then 2696.00 and 2692.00 would be in-play.