Day Trading Signals and Strategy - 01-22-2016

Proper context can start the day with a solid win and make all the difference.

CHARTROOM LINK <<==click here (pre-open Market Tour begins at 8:55 ET)

Through the prior close... Thursday's open recovered a dip that attacked 1840.00 to probe fresh highs testing 1883.00 into the noon hour. Reacting down throughout the bias environment held unchanged levels at 1852.00. The balance of the session firmed to test Wednesday's 1869.00 high by several ticks. Overnight action's new info... Extending Thursday's late-afternoon 1855.00-1870.00 range ended before midnight, replaced by a rally back to and through Thursday's highs to 1892.00. If, then... There is significant resistance at 1892.00. Its first test as support had launched a bounce that delayed the decline, and its first test as resistance had reacted down to resume the decline to new lows. It is also the 261.8{faed0d6dca04cec8b6b7985efddb9b0651107a3aebb05f69f0166038b8c951f6} projection of a Complex Triangle that had formed during last night's initial ranging. Exiting the open above it can successfully overcome both elements of its resistance, and allow trending higher intraday. Maintaining a gap up would also overcome that yesterday's rally gained no traction. Otherwise, even if gapping up, not trending sufficiently higher through the open would be vulnerable to trend back down. Either way, being a Friday, the morning's bias is likely to persist into the afternoon. The weekend's impending illiquidity has a way of exacerbating trending. First Trade... Exiting the open at 9:45 above 1890.00 would be unlikely to reverse the overnight rally. Exiting the open under 1883.50 would become likely at least to test the 1875.00 bias-up target as support.

Post-open gains retraced. The open's test of 1892.00 didn't surge higher. Extending up required first blipping-down to 1887.00 stretched the rubber band. Its reversal tested the next higher objective at 1898.00. 1898.00 was probed up to 1900.00. Throughout a half-hour, every high bar also overlapped 1898.00. The next half hour retraced the open back down to 1890.00. And now the open's blip-down to 1887.00 is being retraced, too, down to 1886.00. This being a Friday, the open's bias should persist. So, having maintained an uptrend through 10:15, selling pressure should be counter-trend, sponsored by weak hands -- and likely to be retraced at least to retest 1898.00.

FRI afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 1897.00  1890.00 ...would target  1902.50  1895.50 Bias-down: under  1888.00 1881.00 ...would target  1882.00  1875.00 Signal status: BIAS-UP, BIAS-UP TARGET MET FAQ INTRO VIDEOS #1 and #2 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.

Mid-morning slide recovers. This morning's reaction down from 1898.00 came after the bias timing window's 10:15 signal. The timing suggested that its sponsorship was weak-handed, and therefore unlikely to reverse the trend down. The reaction was a little deeper than I had anticipated, attacking 1883.00. But its potential back up to 1998.00 is now fulfilled. Bias-up was triggered along the way. Its target is fulfilled, too. There's no requirement to trend any higher, especially so long as 1898.00 is holding its retest. That could be a probe above this morning's 1900.25 high that exits the bias environment back under 1898.00. Neither is there any requirement to trend back down. Exiting the bias environment back under 1895.50 would at least suggest the bias environment had fulfilled buyers.

Exiting Friday's bias environment probing fresh session highs usually marginalizes sellers for the day. An exception was possible if exiting the bias environment back under the afternoon's 1895.50 bias-up target. It was being probed and overlapped during 2:30-3:00, but ultimately held. The dip from 1902.00 to 1892.00 was recovered to end the day back at the morning's 1900.00 high. [Join us at 9:30am ET for this weekend's Saturday Review. Log-in link will be sent overnight.] Details and other markets coverage are discussed in the post-market Wrap recording here.

Monitor overnight Globex trading in the chaRTroom here.