S&P
The First Trade & Pre-open Tour Recording… [Cue theme from Jaws.]
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…
Tuesday night’s reaction to Gary Cohn’s resignation had gapped down 24 points from the 2724.00 cash session close to 2700.00, then extended down to 2681.00. Wednesday’s open was greeted back at 2700.00, which then recovered to attack 2724.00 to within 1 tick. The open’s gap down was retested into the noon hour, and holding its test was rewarded by recovering to within 1 tick of Tuesday afternoon’s 2730.50 high — which was done by invalidating the afternoon’s clean bias-down signal at 1:30. Last-minute weakness finished a third consecutive session at or near the 2725.25-2727.75 corrective bounce limit.
Overnight action’s new info…
Wednesday’s last-minute weakness drifted only a little lower to 2720.00 before bouncing back to 2727.75. Choppy ranging persisted into and out of Europe’s opens, forming a chart that resembles a shark’s menacing dorsal fin protruding above the water. [Cue the Jaws theme music.] The most recent reversal back into the range has extended through its upper-end, now probing Tuesday and Wednesday afternoon’s highs up to 2733.50.
If, then…
Retesting Tuesday afternoon’s highs was a likely reward for having absorbed Wednesday’s second dip back to the open. The recovery wasn’t rejected through the close, and another test of the corrective bounce limit was held. So, the bearish template is — again — either to reject probes of fresh highs before reversing down sharply, or else to already be collapsing through the open. The latter may seem unlikely now while fresh highs are being probed, but the ECB announcement and Draghi’s press conference are just minutes away. Regardless, extending higher or trending down substantially will be difficult on the day before Friday’s pre-open Employment Situation report. Nevertheless, extending fresh highs Thursday morning would start making fresh highs at 2753.00 or 2765.00 likelier next.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2733.25 would be likely to trigger the 2731.00 bias-up signal at 10:15. Exiting the open under 2727.75 would be unlikely to trigger bias-up.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2731.75 | 2731.00 |
| …would target | 2737.00 | 2736.50 |
| Bias-down: under | 2716.00 | 2715.50 |
| …would target | 2705.75 | 2705.00 |
| Signal status: LATE NO-BIAS, TESTED BOTH BIAS-UP PARAMETERS | FAQ | |
| Flowcharts: Bias-UP // Bias-DN INTRO VIDEOS #1 and #2 |
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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)
Was that a Wednesday Wreversal? They don’t start from extreme gaps, so no, although the three distinct legs would qualify otherwise. The setup doesn’t correlate at all to one trend’s direction or to another’s resolution. But it does reflect growing volatility, so be prepared.
Wednesday’s session was also interesting for invalidating its afternoon bias-down. Recovering 2708.00 was too late to avoid triggering, but its recovery was well-rewarded by reversing up 22 points to 2730.00. Also remarkable for having absorbed the original reaction to Gary Cohn’s resignation.
Meanwhile, Wednesday closed back in the 2725.25-2727.75 corrective bounce limit, which had also held Monday’s high and defined Tuesday’s close. So, the bearish templates are limited again to either rejecting probes of fresh highs before reversing down sharply, or else already collapsing through the open. Extending higher or trending down substantially will be difficult on the day before Friday’s pre-open Employment Situation report. But extending fresh highs Thursday morning would start making fresh highs at 2753.00 or 2765.00 likelier.
- 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))
Slightly higher highs overnight nevertheless retraced in time Wednesday to hold the 1.2435 resistance that had held its test one day earlier.
Gold Apr Contract (jUN , ETF: (GLD))
Attacking 1341.00 Tuesday without closing above 1335.50 had made the reversal attempt suspicious. Wednesday’s reversal maintains that suspicion, but closing back under 1325.00 would actually signal momentum reversing down.
Silver May Contract (SI, ETF: (SLV))
Tuesday’s close above 16.75 was not optimal for reversing the trend up, but it got a benefit of the doubt if confirmed Wednesday. It wasn’t. Closing back under 16.55 invalidated it. Closing decisively under 16.50 would confirm that momentum has reversed down targeting fresh lows.
30-year Treasury Jun Contract (US, ETF: (TLT))
Downtrending resistance and Tuesday’s 143-22 high held their tests Wednesday, still having room up to 144-10 without yet reversing the trend up.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
The knee-jerk reaction to API had probed probed under 62.25, but that was recovered into Wednesday’s open. Volatility into and out of the morning’s EIA report eventually extended down sharply to 60.60, back under the 61.35 bounce limit. If not rejected Thursday, then a new downleg is confirmed.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
Trending up again overnight gapped up Wednesday to test 2.81 resistance. A single-session’s blip-up was likely to react down sharply. The two-session pattern remains vulnerable to reversing down, while greeting Thursday’s EIA report from a position of strength.
Mid-day Update… Tooth and nail.
Post-open bounce retraced, for awhile.
Greeting the open at 2700.00 had reacted up to 2713.25 and 2718.75 targets. And higher to 2723.50, but too late for the extra effort to earn any extra reward. 
Too late, because the 2717.00 bias-down signal had triggered cleanly, and it wasn’t recovered in time to invalidate it.
Any doubt otherwise has been countered by dropping back to the open. Not only the open, or not really the open, but 2701.50. There’s nothing bullish about its retest. Its re-re-retest including the overnight action. Even if recovered again, the existence of these two new intraday tests can’t be undone.
So, the ongoing question is whether the eventual negative consequence can be delayed by yet another detour up. The afternoon’s 2708.00 bias-down signal was just invalidated after having triggered cleanly. There’s no requirement to retrace 2708.00 unlike this morning. But 2708.00 happens to be a calculable sell signal, and back under it would signal the drop resuming.
Meanwhile, invalidating a bias signal has no objective. The 2699.00 bias-down target could be fulfilled anyway. And there already being no bullish reason to revisit 2701.50, its break this afternoon would be likely to extend down sharply.