S&P
Post-open Review… Tacking.
Overnight rally’s gain disappears, with consequences.
Extending 21-22 points highs overnight to attack 2680.00 had created a relative low at 2669.00. It was the reaction down from a fresh high that was, itself, recovered to a higher high. As I described during the Market Tour, there was no bullish reason to revisit it. Not holding its test through the open would be difficult to recover, if not also signal momentum reversing down.
It was already being probed before the open, down to 2666.00. The open’s blip-up attacked the 2671.00 bias-up target to within 1 tick, near enough in this environment to consider it tested. Its reaction down avoided triggering the 2663.75 bias-up signal at 10:15. Offsetting tests of BOTH bias-down parameters was put into play.
The signal has been productive since triggering, extending down to 2652.50 through the first hour. This didn’t prevent a bounce to 12-point 2664.50, but that doesn’t invalidate the bias signal. Which is exactly the point of the signal, to identify the contextual bias — that bounces are likely to resolve down.
So, the latest bounce is trying to resolve down now. Back above 2666.00 when the bias environment begins lapsing at 11:30 would give the recovery another chance. But meanwhile the likely resolution is down, to test 2648.75 if not also 2637.75.
The First Trade & Pre-open Tour Recording… Stretching and pushing it.
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 rally had all but peaked nearly 4 hours before the open. Touching, testing and probing 2634.00 had reacted down to 2626.00-2627.00 each time. One final time through Monday’s open also reacted down, but much more substantially to 2602.00. That was the morning’s bias environment. Recovering into and out of the afternoon bias environment extended sharply higher to 2662.50, probing above Friday afternoon’s ~2650.00 high. Friday morning’s 2658.50 high was still being tested at the close.
Overnight action’s new info…
Monday afternoon’s rally soon resumed after the Globex open. And it has only extended higher, including an Ascending Triangle at 2672.50 that resolved up to 2678.50 through Europe’s opens. Now a fresh high attacking 2680.00 has reacted down to test and retest 2672.50 as support.
If, then…
The reward to recovering yesterday morning’s high was a retest of Friday afternoon’s ~2650.00 high. And the reward to recovering that is a retest of two prior highs up to 2691.50. That was more than 40 points higher when 2650.00 was being tested, and now it’s only 12 points higher. The recovery is already 94 points above Friday’s late low, which is a little faster-paced for the rally than for the decline. The differential isn’t wide enough to label the rally as a “bear market bounce,” but surging beyond the open would could make the afternoon vulnerable to reversal. However, a post-open dip would be difficult to resume the rally if not absorbed quickly.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2675.00 would be likely also to exceed the 2671.00 bias-up target at 10:15 to renew the bias-up signal.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2662.50 | 2663.25 |
| …would target | 2670.50 | 2671.00 |
| Bias-down: under | 2648.25 | 2648.75 |
| …would target | 2637.00 | 2637.75 |
| Signal status: NO-BIAS, TESTED BOTH BIAS-UP PARAMETERS | 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)
Monday’s gap up to 2630.00 had bitten off more than it could chew. Its eyes were wider than its stomach. It flew too close to the sun. However we characterize it, 
Monday’s open extended the overnight rally only briefly before reversing down sharply through the morning.
Whatever it was, the open’s brief strength wasn’t “ineffectual optimism.” The overnight rally failed its attempt to extend, but each of the open’s relevant timing windows held up. The morning’s reversal originated after the 10:15 bias timing window.
Maintaining the open’s recovery above Friday morning’s low did form a sort of Isolation setup. So, the subsequent dip began from a position of strength. Recovering before noon would have been optimal, but at least the drop stopped when the bias environment began lapsing. In either case, its sponsorship wasn’t gaining reinforcements. Regardless, the drop was recovered, and then the morning’s rally resumed. Its minimum reward for having absorbed the dip was to retest Friday afternoon’s ~2650.00 high.
The afternoon rally gained traction first by exiting the bias environment above the noon hour’s high. Entering the final hour above the bias environment high confirmed, albeit still overlapping. Clarification arrived by extending above ~2650.00 through the 3:10-3:20 proxy window. Immediate follow-through already tested Friday morning’s 2658.50 high without closing above it. But unless rejected immediately Tuesday back under ~2650.00, the next higher objective in-play is 2691.50.
- 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 Mar Contract (EC, ETF: (FXE, UUP))
Friday’s close above the 1.2410-1.2425 bounce limit had coincided with downtrending resistance. Monday’s open gapped up through it and trended sharply higher intraday to 1.2535. Upside momentum remains intact so long as 1.2480 holds as support.
Gold Apr Contract (jUN , ETF: (GLD))
Flat-to-lower ranging Sunday night resolved up Monday to probe fresh recovery highs at 1358.00 filled the 5-week old gap at 1354.00. Momentum remains up so long as 1347.00 now holds as support.
Silver May Contract (SI, ETF: (SLV))
Gapping up Monday was initially resisted by Friday’s test of 16.65, but it eventually broke higher. Its reaction down held 16.65 as support to maintain the rally’s momentum.
30-year Treasury Jun Contract (US, ETF: (TLT))
Recovering to close back above 144-22 again Monday after Sunday night’s retest of Friday’s lows further suggests that the 144-22/145-04 range’s upper-end will still be broken before a durable break lower can develop.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Friday already fulfilled the confirmed breakout’s minimum requirement for an eventual higher close. The upside momentum next targeting 64.88 remains intact so long as pullbacks now hold 64.64 as support.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
The long-awaited 2.62 target was finally touched Friday, and its shallow reaction up extended Monday to 2.67. This should be the bounce’s peak before resuming the decline to 2.52, which remains likely since so much optimism preceded the eventual first objective’s test.