S&P
Post-open Review… Too soon?
Overnight highs retraced to unchanged.
The bearish template for today is a recognition of the rally being intact. This may prove to be a temporary correction, but its series of higher highs and higher lows was maintained through yesterday’s close. Yesterday’s peak met and held the correction’s 2727.75 limit, but it
wasn’t rejected by reversing down into the close.
So, reversing down could be done either by rejecting probes above yesterday’s highs, or else already gapping down. Overnight news produced a probe above yesterday’s highs up to 2734.50, which the open retraced — first to 2720.00 and then to 2717.50. The 2727.75 bias-up signal didn’t trigger.
And still the series of higher highs and higher lows remains intact.
More so, the retracement filled the gap back to yesterday’s close. And held it, through the open. That was the time for sellers to have broken under the prior close, or to have delayed testing it at all. Testing it and holding it through a relevant window like the open undermines sellers. In fact, an 11-point bounce just tested 2727.75 as resistance (too late to trigger, or to invalidate that it didn’t trigger).
Even if we knew with 100% certainty an offsetting test of the 2704.75 bias-down signal will be fulfilled today, the path there is not assured. This bounce up to 2727.75 could extend to 2731.00-2732.00. Back under 2723.00 first would start to signal another downleg underway already.
The First Trade & Pre-open Tour Recording… Blipping-up.
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 choppy ranging had developed exclusively in negative territory, back-and-forth within Friday’s late surge, and below it down to 2664.00. Monday’s first hour was less adventuresome, ranging even more narrowly. But at the last possible minute a Dry Cleaners morning signal was avoided by surging back to unchanged at 2690.00, and through it to test the morning’s 2699.00 bias-up signal. Extending higher into and out of the noon hour eventually tested the 2725.25-2727.75 corrective bounce peak described during this weekend’s Saturday Review. The close drifted down to 2717.00.
Overnight action’s new info…
In a throwback to the golden years of two months ago, an unusual 5-point wide range was maintained for hours. Yesterday’s late pullback to 2717.00 held throughout, resolving up to greet Europe’s opens attacking 2727.75. Another 5-point consolidation was resolved more aggressively by surging to 2734.50. Its reaction has dipped back down to 2727.75.
If, then…
Overnight support was apparently a function of last week’s tariffs losing credibility. Overnight gains are apparently a function of a North Korea disarmament talks overture. Whatever the story behind it, this price action is consistent with the bearish scenario of probing yesterday’s highs before failing — whether probing higher this morning and failing this afternoon, or already failing through the open. The bullish scenario departs from the bearish scenario by not rejecting the higher probes. Negotiating the range between yesterday’s close and its highs at 2718.00-2728.00 could be the difference between rallying and reversing.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2725.25 would be unlikely to trigger the 2727.75 bias-up signal at 10:15.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2728.50 | 2727.75 |
| …would target | 2737.00 | 2736.50 |
| Bias-down: under | 2705.25 | 2704.75 |
| …would target | 2694.50 | 2693.75 |
| Signal status: NO-BIAS, TESTED BIAS-UP SIGNAL | 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 afternoon’s 2726.50 bias-up target was met by new highs into the final hour. Overbought RSIs helped a reaction down to 2720.00 to recover back to the high. And slightly higher, to 2727.75. RSIs were no long overbought on the retest, and price drifted back down to close under 2720.00. Monday’s close is essentially at equilibrium.
Recall from this weekend’s Saturday Review that 2725.25-2727.75 is the projected peak of a corrective bounce. Exceeding it through any relevant timing window would suggest something more substantial to the upside underway. Otherwise, if the correction from Friday’s low is done, then it should resolve down without much delay.
If/When sellers do retake control, they’ll likely be overwhelmingly focused on retracing the entire bounce as quickly as possible. So, any credible reversal down is unlikely to begin late in the session when it’s more difficult to attract sponsorship.
Resolving down without much delay should also be done without much confusion. Save for an initial stage that starts and stops, backing-and-filling up to Monday’s close, aggressive selling should be obvious into or out of Tuesday’s noon hour. Tuesday morning could be spent probing positive territory up to 2736.00 trying to extend Monday’s rally, and still be vulnerable to peaking.
- 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))
The corrective bounce including “higher prior lows” at 1.2345 was still being tested Monday, instead of yet reversing back under 1.2300 to signal momentum reversing back down.
Gold Apr Contract (jUN , ETF: (GLD))
Sunday night’s bounce up to 1329.00 was retraced before Monday’s open to hold under 1325.00, and to keep alive the potential for breaking lower to resume the decline.
Silver May Contract (SI, ETF: (SLV))
Fresh highs Sunday night tested 16.60 but was retraced to hold back under 16.50-16.55 resistance which continues to consider the bounce from testing 16.25 as only a temporary correction. Otherwise, closing above 16.55 would be vulnerable to extending higher aggressively.
30-year Treasury Jun Contract (US, ETF: (TLT))
Bouncing Sunday night up to 144-05 and a shallower bounce after Monday’s open was reversed to probe under downtrending support down to 142-24, which is also a sell signal that intersects at 143-12. The trend reverses down if its break is maintained through the close.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Thursday and Friday’s tests of the 61.35 bounce limit didn’t hold Monday morning, which broke sharply higher through the 62.25 sell signal to test 62.80. There isn’t any specific bullish consequence to maintaining the recovery, although it would greatly undermine the near-term downside.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
Still ranging narrowly at the 2.75 high could trigger a probe of fresh low back under 2.71, or else by a temporary blip-up to 2.81.