S&P
The First Trade & Pre-open Tour Recording… No argument.
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…
Ranging sideways overnight had briefly probed under Tuesday’s intraday lows, but Wednesday’s open gapped up. The gap up was immediately retraced, but not enough to probe back under Tuesday’s lows, forming the basis of an Isolation setup. The bias-up signal triggered, too, after already having come within 2 points of its target. Both setups were invalidated — by probing back under Tuesday’s lows and by exiting the bias environment under its bias-down signal, respectively. Neither rejection equated to a sell signal, but an afternoon recovery back into positive territory ended when the bias environment began lapsing. The balance of the session plunged 47 points to retrace almost all of the past week’s rally.
Overnight action’s new info…
The late intraday plunge to 2712.00 was initially consolidated back up to 2722.50. Another smaller collapse suddenly fell to 2703.00, which began another consolidation through midnight. A hopeful rally back to the earlier highs greeted Europe’s opens. But hovering there narrowly for another hour wasn’t hopeful enough to avoid sliding back down to the overnight lows. And now lower, having just touched this morning’s 2698.25 bias-down target, where last Wednesday afternoon’s plunge had closed.
If, then…
For all of the recent selling, a new downleg hasn’t yet been triggered. There certainly are reasons to suspect that sellers are stronger-handed. Such as, rejecting the bias-up three times in two days, which is distributive but not a trigger. Retesting the original pullback’s 2701.50 limit — whose test last week had reacted up into Tuesday morning’s high — isn’t necessarily bullish, but it’s not bearish without closing below it. And now the same can be said of a recovery. While yesterday’s renewed selling may be no more than pessimism ahead of Fed chair Powell’s Senate testimony today, a relief rally after he appears won’t be enough to suggest the recent low’s retest has held. The only early reliable setup from the overnight pattern would require the open to probe above its 2722.50 high. Anything shallower will remain vulnerable to probing lower intraday, regardless of its resolution.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2701.50 would be likely to trigger the 2707.50 bias-down signal at 10:15.
Morning Bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2726.00 | 2726.00 |
| …would target | 2732.00 | 2732.25 |
| Bias-down: under | 2707.25 | 2707.50 |
| …would target | 2698.25 | 2698.25 |
| Signal status: LATE NO-BIAS, TESTED BIAS-DOWN 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)
The Fed chair’s two-day congressional testimony used to be consecutive days. And the second day was reliable for reacting differently than the first, as the first day’s comments were already discounted or walked back. Without immediately walking back Tuesday’s surprisingly hawkish comments, did Wednesday’s pause give Tuesday’s drop an opening to extend?
Monday’s rally had become excessive optimism, silliness ahead of the new Fed chair’s first congressional testimony. Tuesday’s outside day proved that, ending under Monday’s low. Leaving the question for Wednesday, whether it would essentially range sideways while awaiting
Thursday’s second day of testimony. Overnight action tested fresh lows but recovered enough to form the basis for an Isolation setup. And the morning’s bias-up signal triggered.
That’s a lot of bullish potential. So much so, that I warned overwhelming it must be done by substantially stronger-handed sellers. It was undone by much stronger-handed sellers.
Peaking 2 points short of the morning’s 2764.00 bias-up target was reversed to probed 1 point under the 2738.50 overnight low. The afternoon’s rally peaked upon probing 6 ticks above its 2757.00 bias-up target, then plunged 47 points through the close. And the close easily probed under 2729.00 “lower prior highs” down to 2712.00.
Is the 1987-style crash template playing out? Inflecting down instead of up wasn’t necessary, but inflecting down, it is. Crashing instead of only probing prior lows isn’t necessary, but the minimum 2509.00-2511.00 objective will seem that way. Perhaps the only chance to avoid falling over the edge is to rally early Thursday, and to rally sharply. A shallower bounce would remain highly vulnerable to trending down into and out of the weekend.
- 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))
Four consecutive narrowly ranging sessions had broken lower Tuesday. There was no bullish reason for returning to 2-1/2 week old prior lows. Extending lower Wednesday to a second consecutive lower close confirms at least an eventual third lower close is required.
Gold Apr Contract (GC, ETF: (GLD))
Bouncing $10 Wednesday was largely retraced to remain within proximity of the 1312.50 sell signal whose break would target 1291.50.
Silver May Contract (SI, ETF: (SLV))
Wednesday’s bounce peaked within its 16.50-16.55 limit which held through the close to maintain the lower objective in-play at 16.25.
30-year Treasury Jun Contract (US, ETF: (TLT))
[Rolling coverage forward to Jun which trades at almost a 1-point discount from Mar]… Tuesday’s gap down to its 143-00 sell signal and ultimate intraday drop had neutralized a couple of lower gaps. Wednesday’s gap up to and through 143-00 firmed into the afternoon, but held the 143-12 bounce limit. The gap back down to last Wednesday’s 141-20 remains outstanding.
Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Tuesday’s close under the rally’s 63.45 pullback limit extended down Wednesday to fluctuate around the 62.25 sell signal. Still being tested through the close, closing under Wednesday’s 61.75 low Thursday would confirm a new downleg underway.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
Still fluctuating narrowly Wednesday keeps alive the likelihood for a fresh low before a rally effort would be credible. That’s not necessarily greeting Thursday’s EIA report from a position of strength, but neither is it a position of weakness, so recovering a fresh low would be likely to extend higher into and out of the weekend.
Mid-day Update… No rushing to judgement.
Busted bullish setups haven’t defaulted to bearish.
Price action in between Fed Chair Powell’s congressional testimonies continues to be choppily range bound. That range is repeatedly testing support below, so there’s no assurance of the range persisting.
The open’s Isolation setup barely triggered by maintaining the open above yesterday’s low, despite immediately retracing down through 9:45. Ultimately, the morning probed 6 points under yesterday’s low down to 2737.50, which isn’t optimal. And it doesn’t get a benefit of the doubt.
The morning’s 2754.75 bias-up signal triggered cleanly at 10:15 but it was never more productive than the 2762.00 test before then. So, exiting the bias environment under its 2744.50 bias-down signal was eligible to invalidate the bias-up, so its 2764.00 target doesn’t become “unfinished business above.”
Sellers tried to exploit the rejections, and the noon hour dipped to 2741.75. But rallying into the noon hour’s exit up to 2754.00 has triggered a late bias-up above 2750.50. Exiting the bias environment under 2741.00 would invalidate it — for a third window in two consecutive days. Back under 2744.50-2746.00 would start to make that likelier.