S&P
Post-open Review… No takers.
Gap down only worsens.
The 2775.00 bias-down target held several tests before the open. One of its reactions peaked at the 2782.00 bias-down signal, and still 
resolved down to 2771.25 before the open. Its reaction only attacked 2780.00 before the open.
Post-open action also repeatedly tested 2775.00. Which was still being tested at 10:15 to avoid renewing the bias-down signal, but neither was its test rejected. And this is still a bias-down environment. In fact, fresh lows touched 2765.50.
A knee-jerk reaction to a non-financial headline triggered that last push lower, which stretched the rubber band to now snap back up sharply. The 2775.00 bias-down target’s resistance is now being probed, and maintaining its recovery would be credible for extending higher. However, it’s being attacked by the first reaction up from the prior trend’s extreme, which has a horrible track record for triggering reversal signals without yet correcting by 61.8%.
2765.50 also tested last Friday’s prior low at 2767.00. There’s one chance for its test to launch a durable recovery. Not maintaining the recovery above 2775.00 and breaking back under 2770.25 would next target a test of the 2756.00 area.
The First Trade & Pre-open Tour Recording… Isolation setup getting isolated.
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…
Thursday’s open was greeted back above the 2783.00-2784.00 support that had defined Monday-Wednesday’s lower-ends. That is, until Wednesday’s late break down to 2779.00-2780.00. Gapping back up and maintaining it formed an Isolation setup that would prevent sellers from gaining any traction for their efforts. But it couldn’t prevent them from trying, which is usual on the Isolation setup’s morning. So, a post-open surge up to 2794.00 reacted back down to 2781.00. Although the dip was recovered by noon to within ticks of the 2790.50 open, the balance of the session only ranged choppily sideways. And that is NOT usual for the Isolation setup’s afternoon. But it’s not yet disqualifying to maintain its objective to retest Wednesday’s 2796.00 high, and incidentally also unfinished business above at 2798.00.
Overnight action’s new info…
Thursday’s last swing ended back within ticks of the 2790.50 open. A hold-long setup narrowly avoided triggering. So, a dip initially returned down into the 2783.00-2784.00 range, and then recovered back up to the 2788.00-2788.75 range. But no overnight strength developed that would have been credible for extending higher. Which was explained at Europe’s opens, as forthcoming US trade tariffs on China are being blamed for triggering a quick slide to 2773.50. (Rumors are also surfacing of Merkel’s government being on the verge of collapse.) A blip-down just briefly probed a fresh low down to 2772.00.
If, then…
Avoiding a hold-long setup at yesterday’s close only indicated the vulnerability to overnight weakness, but it didn’t predict a drop. And now the market is responding to headlines that are not new, so they are already somewhat discounted. Which is not to say the market isn’t justified in discounting them more, but those discounted dips often snap back up. Meanwhile, there’s a race between fulfilling a couple of upside attractions, and eventually fulfilling the distribution that we’ve been discussing for the past two week. We’re still expecting a bearish WedEX influence this afternoon, regardless of the environment or level that greets it. In the interim, this being a Friday, the morning’s bias tends to persist through Friday’s noon hour. Other Friday Factors will be relevant, too. Like sponsorship being difficult to generate, and counter-trend sponsorship being more difficult. But counter-trend sponsorship always becomes easier to generate at a test of support/resistance. So, cobbling together a morning rally would still have plenty of resistance above.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 back above 2783.00 would be unlikely to trigger the 2782.00 bias-down signal at 10:15. Exiting the open under 2778.75 would be likely to trigger bias-down signal. Exiting the open under 2774.00 would be likely also to exceed the 2775.00 bias-down target at 10:15 to renew the bias-down signal.
Morning Bias
| FRI morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2787.75 | 2792.50 |
| …would target | 2793.25 | 2798.00 |
| Bias-down: under | 2777.25 | 2782.00 |
| …would target | 2770.25 | 2775.00 |
| Signal status: BIAS-DOWN, BIAS-DOWN 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)
Thursday’s Isolation setup wasn’t very productive. But it prevented a resumption of overnight selling. Isolating the overnight probe of Wednesday’s lows puts into play a retest of Wednesday’s 2796.00 high. Unfinished business is already left outstanding from 2798.00. Thursday morning’s backing-and-filling was usual for the setup, but no afternoon rally was unusual. Nevertheless, fresh highs remain likely so long as Wednesday’s lows hold.
Already rallying overnight to within proximity of the highs would be vulnerable to an early rejection of probing prior highs. That pattern has been absent for a couple of sessions. A hold-long setup narrowly avoided triggering, but almost any overnight strength would be credible for extending.
Meanwhile, we’ll assume the bearish WedEX is intact. It wasn’t triggered decisively at Wednesday’s close, so not rejecting it decisively at Thursday’s open — i.e. only opening at the level whose recovery would have been decisive — keeps the door open to trending down Friday afternoon and more so Monday morning.
Being a Friday, the Friday Factors will be relevant. The morning’s bias tends to persist through Friday’s noon hour. Sponsorship is difficult to generate, while counter-trend sponsorship is more difficult. And a new trend extreme close, which is nearby, would entrench the trend. It’s the rare expiration session that reverses intraday, but they are very productive when they occur.
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 Jun Contract (EC, ETF: (FXE, UUP))
Bouncing back to resistance overnight didn’t prevent the reaction to Thursday’s ECB statements from plunging through the 1.1745 sell signal to fresh lows attacking 1.1590, probing into the 3-week old low’s session and targeting the gap back to that session’s 1.1550 close.
Gold Aug Contract (GC, ETF: (GLD))
Wednesday’s tests of the 1296.50 sell signal had recovered to the range’s 1307.00 upper-end, which was probed overnight up to 1313.00, but held intraday Thursday.
Silver Jul Contract (SI, ETF: (SLV))
Already extending higher after Wednesday’s close in reaction to the FOMC events, higher highs were probed overnight to gap up Thursday morning. Two-month old gaps up to 17.20-17.30 were tested, with no requirement to extend any higher before a pullback to 16.80.
30-year Treasury Sep Contract (US, ETF: (TLT))
The FOMC reaction’s dip to 142-02 Wednesday was recovered overnight and probed the 143-16 buy signal intraday Thursday.
Crude Oil Jul Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Still firming overnight to attack the upper-end of 66.25-67.25 resistance, Thursday morning’s shallow reaction down held the range’s lower-end to keep alive its buy signal.
Natural Gas Jul Contract (NG, ETF: (UNG, UNL))
Thursday’s EIA report was greeted from a position of strength, which wasn’t exploited intraday as the session only ranged narrowly around 2.95.