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

CHARTROOM LINK (pre-open Market Tour begins at 8:55 ET)

Through the prior close... Monday's recovery of Sunday night's slide had probed fresh highs by a 2-3 point margin. Despite that coming very late, a last-minute dip ended the day 2-3 points into negative territory. No traction was gained by the intraday rally, and Friday's breakout was not confirmed, two elements of "ineffectual optimism." Overnight action's new info... Narrow ranging at Monday's close eventually began sliding. Ranging narrowly again at what is this morning's 2004.00 bias-down signal eventually broke lower to range around this morning's 1998.50 bias-down target. Probing its lower-end down to 1996.50 has snapped back up into the range. If, then... We began monitoring a topping pattern last Saturday. It defined intraday action until Friday's overnight rally and gap up to fresh highs. Was Friday an exception, or the new rule? Monday's session somewhat validated by not rejecting it. But not confirming Friday's breakout leaves the door open to rejecting it. Of course, the burden of proof is greater for its delay. Yesterday's ineffectual optimism in S&Ps offers more evidence. An index comparison offers more evidence, in that only the Dow has extended to fresh highs for two consecutive days, while NDX has only now closed above its prior high. S&Ps opening under Friday's lows (as is indicated overnight) would not be required to fill the gap back to Monday's high. Last week's intraday dips only trapped shorts whose squeeze fueled Friday's breakout. Similarly, absorbing this morning's gap down would trap more shorts for another squeeze to fuel the rally. First Trade... Exiting the open at 9:45 under 1995.00 would be likely also not to recover the 1998.50 bias-down target by 10:15, renewing the bias-down signal. Exiting the open at 9:45 above 2001.50 would be likelier to hold the bias-down target through 10:15, and to avoid renewing bias-down. Exiting the open above 2007.50 would be unlikely to trigger the 2004.00 bias-down signal.

“When you strike at a king, you must kill him.” Ralph Waldo Emerson. Gapping down to and/or through Friday's low would have begun rejecting its breakout.By the same token -- it's flip-side, actually -- coming that close without succeeding would only trap shorts. And squeezing them could succeed where Monday had failed, fueling the rally's resumption. The pre-open low was probed by 1 tick down to 1995.50. An interim bounce to 2000.50 was reversed to a fresh low at 1995.00. All that volatility and lower lows, yet the 1998.50 bias-down target was still being overlapped at 10:15.

So, the bias-down signal was not renewed. It also wasn't rejected in time to signal a recovery yet underway. Meanwhile, fresh lows had room down to 1993.50, albeit likely to recover.

The fresh lows were prevented by a surge attacking 2003.00. Its timing is no more credible than probing fresh lows -- either is likely to be retraced. In fact, the surge has reacted down to 2000.00.

Back under 1998.50 would suggest 1993.50 is back-in play. Testing it at this stage (rejecting the interim surge) would be a little less likely to recover. Exiting the bias environment at 11:30 back above its 2004.00 bias-down signal would instead confirm that trapped shorts are fueling a recovery back to 2010.00-2012.00.

TUE afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above  2014.00 2004.00 ...would target  2019.50  2009.50 Bias-down: under  2006.00 1996.00 ...would target 2000.50  1990.50 Signal status: NO-BIAS 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.

Fresh post-open highs are suspicious. It would seem to be 100{faed0d6dca04cec8b6b7985efddb9b0651107a3aebb05f69f0166038b8c951f6} in-line with pre-open expectations. Gapping down through the 1998.50 bias-down target was half the battle. Extending through it or reacting up from it was the other half. And without extending through it, trapped shorts would be squeezed to fuel a recovery. Bias-down was recovered in time to avoid renewing bias-down. But it was not recovered enough to reverse momentum up. Although sellers aren't in control, a fresh low at 1993.50 became likely so that its recovery could fuel the recovery.

But no fresh low came before bouncing, first to 2002.75 and then to this morning's 2004.00 bias-down signal. Now it's also this afternoon's bias-up signal.

The bouncing is premature. It's sponsored by weak hands. It leaves the door open to fresh session lows. Probing above 2004.00 at the bias environment exit could extend anyway.

The day began at the edge of the precipice, gapping down to critical support at Friday's low. Extending deeper would have launched a much deeper downleg. Avoiding that would squeeze the trapped shorts to probe the drop's origin. At least, avoiding a post-open drop should have recovered. Perhaps because Tuesday's open barely touched Friday's low, instead of probing it, Tuesday's session only  bounced. It wasn't actually a bounce. The intraday series of higher highs and higher lows qualified as a trend. And it wasn't random noise. Only one timing window didn't participate (the noon hour). A 61.8{faed0d6dca04cec8b6b7985efddb9b0651107a3aebb05f69f0166038b8c951f6} retracement of the open's drop had defined the afternoon's high, recovered only by surging into the close. That's essentially "equilibrium." It suggests a very wide-ranging session Wednesday without trending until late-afternoon. The stage is set for Wednesday afternoon's FOMC policy statement and Chairman Yellen's quarterly Q&A. Details and other markets coverage are discussed in the post-market Wrap recording here.

Monitor overnight Globex trading in the chaRTroom here.

WED morning signal (triggered at 10:15 ET) SPX ES Bias-up: above  2019.50 2009.50 ...would target  2025.75  2015.75 Bias-down: under  2009.50  1999.50 ...would target 2003.50  1993.50 Signal status: NO-BIAS FAQ 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.