Day Trading Signals and Strategy - 11-16-2016

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... The ongoing delay in retesting last Wednesday night's 2180.50 high looked promising through Tuesday's open. Indeed, the morning chopped around under the 2169.75 overnight high. But not until Tuesday afternoon when the no-bias environment had barely begun lapsing did a rally from its 2165.00 low break to fresh session highs. The breakout extended almost relentlessly up to 2178.00 into the cash session close, then to within 1 tick of 2180.00 at the futures close. Buyers gained traction. Overnight action's new info... Brief consolidation up to 2180.00 suddenly exploded higher to touch 2185.00. Its quick reaction down to 2181.00 eventually gave way, and the balance of the night has trended back down into negative territory. Now printing fresh lows down to 2169.00 testing yesterday morning's 2169.50 "lower prior highs." If, then... The pattern we've been monitoring continues to behave as expected -- retesting 2180.00, up to 2185.00-2186.00, and being vulnerable to reversing down sharply. The only wild card is all of this playing out overnight instead of intraday. A morning rally still gets a benefit of the doubt, since yesterday's rally gained traction for its efforts. Trending up can begin from gapping down, and would still be likely to probe fresh highs, like the upper-end of 2185.00-2186.00. First testing yesterday morning's 2169.50 "lower prior highs" might be necessary, if that's still being attacked near the open. That would be dangerous, since gapping down under 2167.00 would form a "session-long decline" setup. The bearish scenario wasn't very unlikely before testing the upside objectives... which now have been tested. First Trade... [Click here to view the Bias parameters] Exiting the open at 9:45 under 2166.75 would be likely also to exceed the 2168.50 bias-down target at 10:15 to renew the bias-down signal. Exiting the open at 9:45 under 2170.00 would be likely to at least trigger the 2173.25 bias-down signal at 10:15. Exiting the open above 2175.50 would be unlikely to trigger bias-down.

Holding the pullback now allows one more rally leg. Yesterday morning's 2169.50 "lower prior highs" had been tested thoroughly pre-open. But the retest came just a couple of minutes before coming within 3-5 minutes of the open. That was too early to rely on it serving as if the lower prior highs had been tested post-open. None of which prevented bouncing into and out of the open to probe 2174.25 by 1 point. That's where a short-entry was likely. Its reaction down to 2170.00 stopped 2 ticks short of touching 2169.50. Since then, the 2173.25 bias-down signal almost triggered, and almost didn't. It ultimately triggered noN-bias. Not a bias-down targeting fresh lows, and not a no-bias that requires an offsetting test of the 2181.25 bias-up signal. But I'm expecting a probe above yesterday's 2178.00 cash session high, anyway. That's the reward to yesterday afternoon's buyers for having gained traction. Not necessarily before noon, regardless of the potential for extending higher to also retest the overnight high. But probably not if the bias environment is exited under 2173.25.

WED afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 2178.25  2175.50 ...would target  2183.75  2181.25 Bias-down: under 2170.75 2168.25 ...would target  2165.25  2163.00 Signal 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.

Overnight rally retraced but not reversed, also not resumed. Already testing yesterday morning's 2169.50 lower prior highs pre-open was sufficient to launch a recovery. Holding a post-open test of 2169.50 would have been more reliable. And probably more successful, since the post-open bounce only tested 2176.25 before falling back down to 2169.00. 2169.00 was still being tested as the afternoon bias environment began. The bias-down signal was another 2 points lower, so it didn't trigger. It hasn't been rejected much yet, either. Bounces are only attacking 2173.00. Not rallying this morning would have been likely to produce a new downleg. Not yet reversing down by now suggests any later attempt will fail. Regardless, trending out of the bias environment in either direction would be likely to extend.

Buyers gained traction Wednesday afternoon, but in the least impressive way. The bias environment lapsed at the noon hour's upper-end, but not necessarily above it. The final hour's entry was above the bias environment's high, and the proxy window trended higher. But the morning's high was never probed. Trending up overnight isn't required for resuming the rally tomorrow morning, but it would help. Until resolving up, there's vulnerability to repeating Wednesday's gap down on Thursday. That wouldn't be bullish, at least not near-term. By the same token, not gapping down or trending down at Thursday's open should be bullish for returning to Tuesday's highs. And potentially higher, even if only briefly. Meanwhile, WedEX triggered an active bearish signal. Thursday's open can have a proxy effect, either to become an active bullish signal, or else to reinforce the bearish signal. 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  2181.00 2177.75 ...would target  2186.75  2183.50 Bias-down: under  2171.50  2168.25 ...would target  2165.75  2162.50 Signal status: BIAS-UP 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.