Day Trading Signals and Strategy - 10-09-2015

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

CHARTROOM LINK(s) o Win XP-Friendly entry o non-xp friendly (ilinc) (pre-open Market Tour begins at 8:55 ET)

Through the prior close... Thursday morning was mechanical. Its sideways ranging held relevant support at 1977.00 through its relevant 10:15 time to create upside targets at 1998.00-1999.00. The afternoon's FOMC Minutes release was as responsible for creating that mechanical morning, as it was for breaking it. Already rallying before the news triggered a spike up that eventually extended to within 3 points of last month's 2011.75 high. Closing above 2000.00 kept alive potential fo rewarding the afternoon's buyers for gaining traction, having exited the bias environment above the noon hour's highs and entering the final hour even higher. Overnight action's new info... Choppy sideways action has done nothing to contradict the upside traction, or to fulfill it prematurely. Probing fresh highs up to 2010.50 greeted Europe's opens by plunging down to 1999.00. That has been recovered almost entirely to within 3 ticks. Each extreme is within a couple of ticks of this morning's bias signals, suggesting that the ongoing pattern's influence remains intact. If, then... Traction gained in the afternoon is usually rewarded the following morning by extending in that direction. Already extending much higher.that afternoon can moot the signal, but the late dip back down to 2000.00 neutralized that concern. Recently, trending sharply overnight has tended to fulfill that reward, but that's not a factor currently. First Trade... Exiting the open at 9:45 above 2000.00 would be unlikely to trigger the 1999.50 bias-down signal at 10:15. Exiting the open above 2011.75 would be likely to trigger the 2011.00 bias-up signal at 10:15.

Rally tries to resume, but fails.. The pre-open rally to 2014.00 had reacted down to 2016.00 into the open. A post-open bounce to 2012.25 has reacted down to 2002.50. Along the way, the 2011.75 attraction above was retested intraday for the first time. The 2011.00 bias-up signal was also tested, and rejected through 10:15. This is a no-bias environment. Having held a test of one bias signal, an offsetting test of the opposite bias signal is in-play at the 1999.50 bias-down signal. This will delay rewarding yesterday's buyers until this afternoon, which is today's second likeliest scenario.

That attraction below at 1999.50 can be avoided by exiting the bias environment at 11:30 back above its 2011.00 bias-up signal without having probed any lower after 10:15. Otherwise, that 1999.50 attraction becomes "unfinished business below."

So long as this morning's weakness (ranging narrowly around unchanged is weakness?) doesn't evolve into a deeper downleg, this morning's backing-and-filling should recover this afternoon to probe fresh highs.

FRI afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above  2019.25 2011.00 ...would target  2024.00  2016.00 Bias-down: under  2012.25  2004.25 ...would target  2007.25  1999.00 Signal status: BIAS-DOWN, BIAS-DOWN 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.

Fresh session lows are keeping alive volatility. I had warned upon entering the noon hour that just ranging sideways in this pattern would quash any potential trending for the day. The noon hour did not maintain the range. Probing fresh lows during the noon hour has extended down to satisfy the unfinished business below at this morning's 1999.50 bias-down signal. It was just tested down to 1998.75. Also being tested is this afternoon's 1999.00 bias-down signal target. It's not yet triggered exceeded with the bias timing window having arrived. No-bias A satisfied bias-down means the bias environment's upper-end should be defined by its 2011.00 upper-end (bias-up signal) if tested. Back above 2001.75 would start to signal momentum is reversing up.

A daily summary of high-profile members of several complexes... View a more detailed discussion of each chart at the end of today's Market Wrap. Eurodollar Sep Contract (EC, ETF: (FXE, UUP)) Gapping up Friday filled the 1.1370 gap back up to prior highs. Closing above or below the gap for two consecutive sessions would be the first available signal of whether the break higher is durable, or else peaking.. Gold Dec Contract (GC, ETF: (GLD)) Thursday's FOMC reaction had ultimately resolved down to fill the gap back to Thursday's open around 1137.50. Holding it would allow the rally to resume, which it did overnight by probing fresh highs up to 1159.00. The rally remains intact so long as pullbacks now hold 1148.00 as support. Silver Dec Contract (SI, ETF: (SLV)) Holding the 15.55 pullback limit's test Thursday still hasn't resumed the rally, as Friday ranged widely around Thursday's close. 30-year Treasury Dec Contract (US, ETF: (TLT)) Thursday's overnight bounce didn't prevent Friday morning's fresh lows, but the 156-16 sell signal held its test to avoid confirming the 157-24 sell signal's break.. Crude Oil Nov Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short)) Not confirming Wednesday's breakout did not equate to being a sell signal,  but Friday's probe of fresh highs held Thursday's high to suggest that buyers have expended all available energy without gaining traction for the effort. Natural Gas Nov Contract (NG, ETF: (UNG, UNL)) Friday morning's subdued trading didn't offer any strength to take credibly, perhaps because of the impending weekend. The same setup applies Monday, and early strength would be credible for extending higher intraday targeting 2.67.

MON morning signal (triggered at 10:15 ET) SPX ES Bias-up: above  2019.00 2011.00 ...would target  2024.00  2016.00 Bias-down: under 2009.00  2001.00 ...would target  2004.00  1996.00 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.

Thursday afternoon's buyers had gained traction, so strong hands knew the rally wasn't reversing down. But typically they're also rewarded for their, ahem, foresight. Yet neither Friday morning's or afternoon's bias environments trended up. Downside potential remains limited until probing higher highs -- presumably up to 2019.50 since the attraction up to 2011.75 has been neutralized. Monday's government holiday introduces a wild card into the timing. But unless new objectives are created along the way, fresh highs is the next opportunity to end what is approaching a two-week old corrective rally. Details and other markets coverage INCLUDING BIGGER PICTURE are discussed in the post-market Wrap recording here: https://roddavid10.mitel-nhwc.com/join/fbkcczc

There's no Saturday Review this weekend, but Bigger Picture was addressed in the video linked above. The chaRTroom will NOT be available for Sunday evening's Globex open, not until after midnight due to travel.