S&P
Post-open Review… Holding up.
Target met, held, but not rejected.
The overnight pullback from 2741.00 ultimately extended down to pierce 2733.00 by 3 ticks before the open.. The open rallied immediately up to 2737.00 and then extended to pierce the 2939.25 bias-up target.
Its reaction down has recovered to a fresh high at 2741.25. It’s too late to renew the bias-up signal, but this is still a bias-up environment. Extending higher would next target 2747.25.
There’s still cause for suspicion about this morning’s rally maintaining its gains — let alone extending higher. The overnight pullback will have to serve by proxy as generating pessimism, in lieu of a deeper pullback under Thursday’s highs. That’s not optimal, but it gets a benefit of the doubt until reversed.
The First Trade & Pre-open Tour Recording… Foreshadowing?
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…
Friday’s gap up and probe of fresh highs was rejected after fulfilling the morning’s 2730.00 bias-up target up to 2732.50. Its reversal probed the open’s 2720.00 low by 1 point during the noon hour. The afternoon bias environment dipped 2-4 points into negative territory to 2716.75. But the trend never reversed down. And the balance of the session rallied 10-13 points up to 2727.00-2730.00. It was the first close above the rally’s 2721.50 target, although it was still being overlapped.
Overnight action’s new info…
Sunday night’s open spiked up to 2736.00, and consolidated briefly down to 2733.50. Gradually firming extended higher to pierce Monday morning’s 2739.25 bias-up target by a couple of ticks. Its 2-point pullback recovered to 2741.00 after midnight, but price action since then has trended back down to 2733.50.
If, then…
Friday’s pullback was relatively shallow to correct the two strong days preceding it. It wasn’t too brief, except that Fridays are already less relevant. So, this leaves the question whether resuming the rally requires a deeper pullback. And a deeper pullback would raise the question whether the rally had ended already, and the deeper pullback is actually the trend reversing down. Avoiding any dip to immediately extend higher can’t afford to hesitate, or else it would be vulnerable — if not likely — to duplicate Friday morning’s temporary rally, but with a more permanent reversal down. Greeting the open in negative territory could mean that last night’s action produced that temporary rally, and has reversed the trend down. Extending the rally depends largely on maintaining excessive optimism.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2737.50 would be likely to trigger the 2733.00 bias-up signal at 10:15. Exiting the open under 2729.75 would be unlikely to trigger bias-up.
Morning Bias
| MON morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2734.25 | 2733.00 |
| …would target | 2740.50 | 2739.25 |
| Bias-down: under | 2722.50 | 2721.25 |
| …would target | 2716.25 | 2715.00 |
| 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)
Friday’s gap up and probe of fresh highs was rejected. Not immediately, and not without actually trending up to fulfill the morning’s 2730.00 bias-up target up to 2732.50. But the afternoon bias environment dipped 2-4 points into negative territory and contained the session low at 2716.75.
Fulfilling the bias-up target before being fully retraced means that much more buying pressure was satisfied first, and that no “unfinished business above” was left outstanding. So, the question is whether only briefly probing negative territory is an appropriate consequence. If not, then reacting down further is likely — whether aggressively, or simply backing-and-filling.
And that’s assuming the rally intends to extend. Dipping further could be the beginning of the trend reversing down. Avoiding any dip to immediately extend higher could be another version of Friday morning’s temporary rally, but with a more permanent reversal down.
Details and other markets coverage are discussed in the post-market Wrap recording here.
I’LL SEND LINKS IN THE MORNING TO THE 9:30 ET SATURDAY REVIEW.
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))
Already firming into Friday’s open held its gains to test Thursday’s 1.1975 high. That’s the beginning of resistance up to 1.2025 whose recovery would signal a bounce underway, if not also the trend reversing up (i.e. bottom).
Gold Jun Contract (GC, ETF: (GLD))
Gapping up Friday to 1326.00 was $2-3 short of the corrective bounce potential. But reversing down intraday back under Thursday’s highs filled the gap back down to natural support at Thursday’s close. The reversal also helped to avoid a second consecutive higher close that otherwise could have prolonged the rally.
Silver Jul Contract (SI, ETF: (SLV))
Fresh recovery highs tested the 16.80 corrective bounce target Friday morning, probing it and then reversing back under it. Holding its resistance would help to maintain the corrective bounce pattern, but reversing down immediately wouldn’t be necessary.
30-year Treasury Jun Contract (US, ETF: (TLT))
Rallying overnight touched the 143-19 buy signal Friday morning, and held it. Reversing back down tested the 143-07 sell signal, and fluctuated around it. Having tested both, their support and resistance should be weakened sufficiently to break durably in either direction.
Crude Oil Jun Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Another narrowly ranging session at the highs helps to entrench the uptrend still targeting 74.10. But another narrowly ranging session without yet extending the rally does start making a temporary corrective dip likelier. There’s room down to 70.25 before suggesting anything deeper underway.
Natural Gas Jun Contract (NG, ETF: (UNG, UNL))
Ranging narrowly and essentially flat on Friday didn’t reject Thursday’s rally back to the 2.82 corrective bounce’s high. But neither was Thursday’s rally confirmed, so no higher close is required. That said, another fresh high close at this stage of the pattern would still be more bullish than bearish.