Day Trading Signals and Strategy - 06-01-2016

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)

Special note... I'll be unavailable during today's final hour. There will be no Market Wrap or recording. Blog updates will be delayed until early evening. Thank you for allowing me this flexibility! Through the prior close... Monday morning's slide from 2101.50 extended down to the last hour at 2086.00. The last 5 points were no-bias trending that required being retraced. Which they were. Trending up through the final hour had touched 2097.25 before a last-minute plunge to 2090.50. It was too late to be relevant to the pattern, which otherwise recovered back above the noon hour's 2094.75 high. Overnight action's new info... A push higher before midnight got back to 2099.25, 2 points above Tuesday's last-minute high. But price action since then has only trended down. The 2089.00 area put up a fight, but now 2087.00 is being attacked, 1 point away from yesterday's last hour low. If, then... Tuesday's final hour recovery began too late for it to have gained traction, so extending it without delay requires gapping up. Gapping up depended greatly on extending bounce overnight, or at least not retracing it. So far, either bias signal has been tested, with the bias-down signal struggling to hold. Probing it could recover in time to avoid triggering -- trending back above yesterday's range wouldn't be credible before the afternoon bias environment had begun lapsing. Otherwise, regardless of any "unfinished business above," another session of backing-and-filling would be likely -- at least until the afternoon's Beige Book release. First Trade... [Click here to view the Bias parameters] Exiting the open at 9:45 under 2086.75 would be likely to trigger the 2089.00 bias-down signal at 10:15. Exiting the open above 2092.75 would be unlikely to trigger bias-down.

The overnight drop extended a little post-open to come within 3 ticks of the 2082.50 bias-down target. Its reaction probed the 2089.00 bias-down signal up to 2091.25. A good effort, but it didn't last. And it didn't extend. Overlapping the 2089.00 bias-down signal at 10:15 invoked the grace period. It was touched again, literally 2 seconds after ending the 10:30 bar. I'm regarding this as a noN-bias -- not a bias-down requiring fresh lows, nor a no-bias required to retest overnight highs. In fact, another surge is attacking the post-open high to within 3 ticks. Back under 2087.50 would target fresh lows. Otherwise, this morning could rally back to unchanged. Details and other markets coverage are discussed in the post-market Wrap recording here.

Monitor overnight Globex trading in the chaRTroom here.

WED afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above  2099.00 2097.00 ...would target  2105.00  2103.00 Bias-down: under  2091.00  2089.00 ...would target 2084.50  2082.50 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.

SPECIAL NOTE: I'm unavailable during today's noon hour, and will return soon after... until the final hour. Still touching the 2089.00 bias-down signal at the end of its grace period had triggered noN-bias, removing bias influences from the morning. Meanwhile, probing fresh highs and exiting the bias environment above 2089.00 goes a long way to marginalizing sellers. The 2089.00 bias-down signal was recovered too late to require an offsetting test of the morning's 2099.75 bias up signal. But recovering much more is hampered by timing -- yesterday afternoon's rally didn't gain traction and today's open didn't gap up, so actually rallying above yesterday's high would be suspicious until the afternoon bias environment begins lapsing. The impending 2:00pm Beige Book release might help to inhibit trending meanwhile. Extending higher appropriately would target new highs, essentially 216.00-2018.00.That said, back under 2089.00 would target fresh session lows, unless the break were recovered before exiting the noon hour.

Extending the rally Wednesday without delay had required gapping up, since Tuesday afternoon's rally didn't gain traction for its effort. The overnight drop foreclosed on that possibility, at best delaying it until late-afternoon. A bigger rally could have followed a test of the morning's bias-down target instead of just attacking it to within 3 ticks, and by triggering the morning's no-bias signal instead of noN-bias. So, from the perspective of reverse-engineering, perhaps the traction handicap correctly prevented that. So, rallying soon after the opening dip extended higher into the close, but remained under Tuesday's highs. There is no bullish reason for any further backing-and-filling, let alone for any further delay to rallying aggressively. And since Wednesday's rally didn't gain traction, either, extending higher should begin by gapping up. Not gapping up would not be bullish. [There was no post-market Wrap Wednesday.]

Monitor overnight Globex trading in the chaRTroom here.