S&P
Mid-day Update… Last licks.
Another bias-up target met and held.
This morning’s 2822.50 high fulfilled the 2819.50 bias-up target. It eventually corrected down to 2817.25 as the bias environment was lapsing. Already recovering into noon was vulnerable to a series of headlines that began claiming a deal was reached to re-open government. The noon hour surged to 2800.00.
The next reaction down touched 2824.50. Bouncing back to this afternoon’s 2827.25 bias-up target held it instead of renewing the bias-up signal. Will it extend higher like this morning?
Probably not. Probably not, because usually not. Usually, holding a test of the afternoon bias target through the 1:20 bias timing window will define the bias environment’s upper-end. Usually, the bias environment will back-and-fill, sometimes even trending down. Usually, hovering at the target can exit the bias environment in another upleg.
None of which suggests being short into fresh highs during the bias environment. Rather than be premature, new highs could get further squeezed. Having said that, this last upleg does seem to be the product of only the headlines, and its buying pressure is met. Back under 2823.75 would start to signal momentum reversing down.
Look ahead: Economic Calendar – for Tue Jan 23, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: The annual earnings onslaught is in full swing Tuesday, with about 50 high-profile companies reporting. No econ reports will be competing for attention, although the Bank of Japan policy statement could set the tone.
Redbook
8:55 AM ET
Richmond Fed Manufacturing Index
10:00 AM ET
4-Week Bill Auction
11:30 AM ET
2-Yr Note Auction
1:00 PM ET
Afternoon Bias
| MON afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2820.75 | 2822.50 |
| …would target | 2825.25 | 2827.25 |
| Bias-down: under | 2815.25 | 2817.25 |
| …would target | 2809.50 | 2811.25 |
| Signal status: BIAS-UP, BIAS-UP TARGET MET | FAQ | |
| NEW! Flowcharts: Bias-UP // Bias-DN INTRO VIDEOS #1 and #2 |
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1. At 1:20, 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 1:20 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 1:20 would invoke a grace period through 1:30 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 1:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.
Post-open Review… Best laid plans.
Retail selling offset by resolution rumors.
Our premise was that negative knee-jerk reactions to the weekend’s government shutdown would keep this morning under pressure. Last night’s gap down to the 2803.75 bias-down signal all but affirmed the expectation. 
A pre-open surge to 2812.00 only returned to unchanged, attacking the bias-up signal to within 2-3 ticks. Anyway, it reacted back down 4-1/2 points, presumably preparing for all of that retail selling pressure.
Which never appeared. Or, if they did, retail sellers were overwhelmed by buying in reaction to favorable headlines of resolving the shutdown today.
The nearest inflection point to consider fading was 2811.25, with a stop or stop-and-reverse to long above the 2812.50 bias-up signal. Working through it eventually formed a detached bar that required an immediate resolution. That resolution was up, and Friday’s 2815.00 high was soon retested. And soon exceeded.
Bias-up was not renewed because this morning’s 2819.50 bias-up target was only being overlapped at 10:15. But this is still a bias-up environment. It has been exceeded anyway to 2822.50, and the next higher objective is 2824.50. Back under 2818.50 would signal a reversal underway, albeit limited to the 2812.50 bias-up signal.
The First Trade & Pre-open Tour Recording… Be wary the obvious.
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…
Thursday night had initially probed under the intraday low, testing support at 2792.00. Reversing up to 2806.00 was retraced 10 points down to 2796.00 before Friday’s open. That’s a lot of volatility. Friday’s expiration open continued the volatility by surging to 2808.00 and then swinging a couple of times down to 2801.00 and lower. Then, as is typical of Friday afternoons, volatility disappeared through the noon hour and most of the bias environment. But the balance of the session resumed the rally to new highs up to 2815.00.
Overnight action’s new info…
We discussed during this weekend’s Saturday Review that buyers would all but disappear ahead of Monday’s open. Nervous retail sellers are likely to flood Monday’s open in their first opportunity to react to the government shutdown. Sunday night’s open gapped down to what is this morning’s 2803.75 bias-down signal, and extended immediately to 2802.00. Immediately, but also briefly, bouncing almost as quickly back up to 2809.00 and later briefly 2810.50. Eventually dipping back down to 2806.00 has reacted up again.
If, then…
The open is likely to downtick from the retail crowd’s selling pressure. Its arrival is obvious, so the question is whether it’s quickly absorbed, or extended. Extending down through the opening 15 minutes of volatility, would get every benefit of the doubt for extending into the noon hour as if the bearish WedEX were influential. Friday afternoon’s bearish WedEX influence wasn’t obvious, if it existed at all. The signal did not invert, and may as well be considered invalidated — except that it still provides a template for trending down throughout Monday morning. Later, the new trend extreme close on a Friday now requires another eventual new trend extreme close.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2805.25 would be unlikely to trigger the 2803.75 bias-down signal at 10:15. Exiting the open under 2809.25 would be unlikely to trigger the 2812.50 bias-down signal.