Day Trading Signals and Strategy - 08-17-2016

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)

Through the prior close... Tuesday's gap down to 2181.25 erased all of Monday's gap up from Friday's 2180.00 close. Immediate follow-through to 2177.00 was recovered back up to 2182.50, setting the tone for ranging choppily around 2180.00 through the noon hour. Only then was the open's low probed, not by much and not for long, barely testing Friday's 2175.50 low. Fresh session lows printed at 3 minutes within the cash session close, and "unfinished business below" was left outstanding at the morning's 2174.25 bias-down target. So, holding short through the close was compelling, but not optimal, since sellers didn't gain traction. Overnight action's new info... Initially bouncing back to 2180.00, another point was added into Europe's opens. But that.only triggered a one-hour plunge to fresh lows at 2173.50. Its reaction has so far been resisted by yesterday morning's 2177.00 low If, then... Tuesday morning's unfinished business below is neutralized. Its intraday test had been likely to include 2172.00. That could be moot if the overnight dip has been isolated by recovering it already at Wednesday's open. Gapping up above 2181.25-2182.50 could even form a "session-long rally." Otherwise, testing 2172.00 would likely give way to 2166.00 and 2160.00. This afternoon's FOMC Minutes should be greeted anxiously as it possibly confirms recently raised odds for hiking interest rates sooner. WedEX may trigger at the close. First Trade... [Click here to view the Bias parameters] Exiting the open at 9:45 under 2172.00 would be likely to trigger the 2174.25 bias-down signal at 10:15. Exiting the open above 2177.75 would be unlikely to trigger bias-down.

Opening plunge satisfying objectives. Unfinished business left outstanding yesterday at 2174.25 was neutralized overnight. Testing it intraday would have been likely to include 2172.00. Avoiding its test required isolating the overnight lows by recovering through the open. Which the open did not do. Greeting the open at yesterday's 2175.25 cash session close was like opening the floodgates.

Fresh lows quickly pierced 2174.25. Knowing that its test would include 2172.00 helped to anticipate breaking under an inflection point's 3-minute low to confirm new sponsorship arriving. Extending under 2172.00 through 9:45 helped to anticipate triggering the 2174.25 bias-down signal at 10:15. And now triggering bias-down at 10:15 makes its 2168.00 bias-down target likely to be tested.

Actually, already testing 2168.00 to within 3 ticks has satisfied it. It's still an attraction, especially until a bounce limit is violated. But it won't become "unfinished business below" if left outstanding. It's too late for a break under 2168.00 to renew the bias-down signal. But this is still a bias-down environment, and lower lows could test 2166.00 and 2160.00. Currently, no buy setup is nearby, and 2173.50 must be recovered to begin signaling momentum reversing up. Having expended so much selling pressure so quickly and satisfying a couple of targets, it might start proving difficult to extend deeper with FOMC Minutes just ahead.

WED afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above  2174.75 2172.00 ...would target  2179.50  2177.00 Bias-down: under  2167.75  2165.25 ...would target 2162.75  2160.00 Signal status: BIAS-UP 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.

FOMC Minutes just ahead. This morning's 2174.25 bias-down signal had put into play its 2168.00 bias-down target. Having hovered just above 2168.00 for so much of the bias environment, eventually testing it became likely also to visit 2166.00. A 5-point drop finally broke the range, testing and retesting 2166.00. Reacting up violated the drop's bounce limit and then triggered an inflection point, extending already back up to 2174.25. Having been unfinished business below and this morning's bias-down signal, and the independently calculated early sell signal, 2174.25 is a likely candidate for at least near-term resistance. The noon hour's recovery rally was a reaction to dovish comments from a Fed speaker. Now hawkish FOMC Minutes can more easily trigger a reaction down. Back under 2170.75 would target 2167.00.Absorbing less dovish FOMC comments could extend the recovery, triggered back above 2177.00, which is this afternoon's bias-up target.  

Higher and higher highs into and out of Wednesday's FOMC Minutes kept requiring interim reactions down to recover. Which they did. RSIs didn't get overbought on the last high's 2179.75 retest, and RSIs deteriorated the retest of its 2181.00 high. So, an immediate pullback wouldn't be surprising, and wouldn't be required to recover. Oversold RSIs at Wednesday's 2165.50 low preceded the noon hour and so it requires an eventual retest. That doesn't prevent first extending Wednesday afternoon's recovery to back up into Monday's range, attacking or probing its high. Aiding an extended recovery would be a bullish WedEX signal that signaled at Wednesday's close. Passive, for having held a test of a prior low, and not active since no relevant high was recovered. Invalidating the signal would require gapping down Thursday under Wednesday afternoon's 2169.25 low, or lower (which would also form a "session-long decline" setup). Details and other markets coverage are discussed in the post-market Wrap recording here.

Monitor overnight Globex trading in the chaRTroom here.

THU morning signal (triggered at 10:15 ET) SPX ES Bias-up: above  2185.25 2182.50 ...would target  2190.50  2187.75 Bias-down: under  2176.25  2173.50 ...would target 2170.75 2168.00 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.