S&P
Morning Bias
| WED morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2705.50 | 2707.00 |
| …would target | 2719.50 | 2722.00 |
| Bias-down: under | 2680.00 | 2682.50 |
| …would target | 2663.75 | 2666.25 |
| Signal status: BIAS-UP, TESTED BIAS-DOWN SIGNAL | FAQ | |
| NEW! 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)
Woulda, coulda, shoulda. Tuesday afternoon’s bias environment was exited at 2625.00, the low of a 41-point drop from the noon hour’s high. But it was above the morning bias environment’s low, so not gaining traction. And that was the window where trending was likely to begin. Which it did, triggering a modest 75-point short squeeze up to 2693.00 and 2700.00.
After Monday’s close I described the template for a a substantial afternoon short-squeeze, but it required the morning to contain some scariness. But the open only probed lower, which didn’t fit the definition, not like the overnight plunge. Perhaps the overnight plunge WAS the template’s morning scariness element. Even then, the afternoon short-squeeze should have been more substantial from the refueling.
A more substantial short-squeeze than 75 points? Relative to what it was retracing, yes. Tuesday’s late high only tested Monday’s late high, the last bounce prior to sliding 170 points to the overnight low. That’s no small feat, and neither is its complete recovery — in any time frame. So, a lot of buying pressure was expended only to retrace a drop, and not to close above it. Even December’s prior high held its retest as resistance. That doesn’t marginalize sellers.
What would marginalize sellers? Maintaining a gap up Wednesday. At least above 2722.00, if not also above 2732.00. The reward would be a bigger bounce to 2784.00 or 2793.00. Anything shallower, not maintained or delayed would remain vulnerable to probing under Tuesday’s 2620.00 post-open lows, and potentially new lows for the move.
- 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))
Gapping down Tuesday didn’t entirely compensate for the delay in participating with Monday’s general currency market decline. But it creates a buy signal that would trigger above 1.2465 and targeting 1.2550. Closing back under 1.2395 would start to make a recovery less likely, or at least more difficult.
Gold Apr Contract (GC, ETF: (GLD))
Probing back above 1341.00 resistance overnight was reversed already by Tuesday’s open, and then intraday to fresh lows testing 1329.00. Back above 1341.00 would still be credible for extending higher, but the door is open to a deeper pullback.
Silver Mar Contract (SI, ETF: (SLV))
Bouncing overnight to test 16.95 as resistance was reversed back down 25 cents before Tuesday’s open, and trended down to fresh lows intraday. Another test of 16.95 would be likely to extend, but that becomes unlikely if delayed by another day.
30-year Treasury Mar Contract (US, ETF: (TLT))
Rallying steeply while stocks plunged overnight wasn’t rejected Tuesday morning. But the test of “higher prior lows” up to 147-23 was retraced before the open to only fill the gap back up to Friday’s 146-03 close. The session only ranged choppily around unchanged, as the pattern still requires at least one more new low close.
Crude Oil Mar Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Ranging flat-to-lower Tuesday held 63.15 support whose break would next target 61.50. Closing back above 64.20 would now be able to resume the rally targeting 67.15.
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Monday’s drop had extended under the gap that two prior sessions had stopped optimistically short of filling. Tuesday’s lower low only recovered to fill the gap back up to Monday’s close, but closing above Friday’s 2.86 close would still signal momentum reversing up.
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Mid-day Update… Hanging in there, just don’t breathe.
Morning chop now followed by afternoon chop.
This morning’s post-open surge had formed a Running Correction between 2633-2651. Entering the noon hour beyond either end would have been likely to trend in that direction. Trending would be possible, but not from that signal.
The noon hour was entered 1 point above the pattern’s lower-end. And despite probing above its upper-end during the noon hour, now the afternoon bias environment is being entered back at the pattern’s lower-end.
Meanwhile, this afternoon’s bias-up signal failed to trigger, and wasn’t rejected (noN-bias) after the noon hour had met its target. Another break lower would still have potential to probe fresh post-open lows, if not also under the overnight lows. Back above 2660.00 would start to signal a rally into the close is underway.
Look ahead: Economic Calendar – for Wed Feb 7, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Fed speakers are back, starting with Wednesday’s late morning appearance. That’s the session’s only influential calendar item.
MBA Mortgage Applications
7:00 AM ET
EIA Petroleum Status Report
10:30 AM ET
*Charles Evans Speaks
11:15 AM ET
10-Yr Note Auction
1:00 PM ET
Consumer Credit
3:00 PM ET