Day Trading Trading Signals - 02-10-2015

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

Enter the Chartroom here (pre-open Market Tour begins at 8:55 ET)

Through the prior close...
Monday didn''t produce the recovery that the pattern suggested would be likely after temporarily extending Friday afternoon''s decline down to 2044.50. The decline extended temporarily Sunday night, but its recovery was held to a break-even at 2051.50. The afternoon''s lower low down to 2036.50 didn''t gain traction wither, recovering back into the overnight range. "Unfinished business above" at 2055.75 was created by the morning''s no-bias environment. So, sellers didn''t gain traction despite trying, while buyers created a higher target without really trying.

Overnight action''s new info...
Narrow ranging at 2043.50-2046.00 had firmed to almost 2048.00 ahead of Europe''s opens. A dip to 2041.00 was recovered back to the initial range''s upper-end. Then Europe blinked -- news (i.e. trial balloon) of a 6-month extension for Greece just triggered a 12-point, 12-minute surge to 2059.00.

If, then...
The attraction to unfinished business above at 2055.75 is now neutralized. Thursday''s cash session and futures closes (2055.50-2057.50) represent last week''s high close, and they''re now being retested as resistance. These are all resistance, and trending up will be difficult without entering a timing window above them. Don''t forget the pattern of trial balloon headline, market reaction that gauges its acceptance, then actual details. This morning''s headline may be valid, but it has yet to be validated, which will be treated as an separate news item.

First Trade...
Exiting the open at 9:45 above 2053.00 would be likely also to exceed the 2055.75 bias-up target through 10:15 to renew the bias-up signal. Exiting the open under 2050.75 would be unlikely to trigger the 2049.00 bias-up signal.

Down the up staircase.

The first several minutes are critical to extending an opening gap. Overnight trending doesn''t yet have intraday sponsorship. So, it can attract counter-trend sponsorship that reverses it.

That was the possibility discussed pre-open about this morning''s reaction to the anti-Grexit leak. Not exiting the open above 2053.00 made the bias-up unlikely to be exceeded. And still overlapping 2050.75 didn''t make the bias-up any likelier to trigger at all.

In fact, bias-up triggered at 10:15, but was invalidated at 10:30. The alternative pattern -- backing-and-filling to 2044.00-2046.00 -- has been fulfilled.

Exiting the bias environment at 11:30 back above 2047.00 would start to signal the post-open dip had ended. Back above 2049.75 would start signaling momentum is reversing up to resume the rally. But exiting the bias environment under 2041.00 would undermine the recovery near-term.

TUE afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 2061.75
2056.50
...would target 2066.50
2061.50
Bias-down: under 2052.50
2047.50
...would target 2047.25
2042.00
Signal status: NO-BIAS, TESTED BIAS-UP SIGNAL 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.

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 Mar Contract (EC, ETF: (FXE))
Tuesday''s gap down filled the gap back down to Monday''s gap down, proving Monday''s session (gapping down then reversed into positive territory) was "ineffectual optimism." Tuesday''s gap down, which then hovered in negative territory without extending any lower, was "ineffectual pessimism" that neutralized Monday''s impatient buying. Recovering above Monday''s 1.1350-1.1360 highs would target 1.1425 and potentially 1.1540.

Gold Apr Contract (GC, ETF: (GLD))
The decline''s 1231.80 target was retested Tuesday. The decline can resume so long as 1236.70 now holds as resistance. Closing back above 1244.50 would trigger a bigger bounce with potential to 1257.00.

Silver Mar Contract (SI, ETF: (SLV))
Monday''s gap up was an inside day compared to Friday''s decline. So was Tuesday''s gap down that mostly ranged sideways. Back under 16.80 would at least target a retest of Friday''s 16.55 low. But closing first above 17.15 would trigger a bigger bounce to 17.40.

30-year Treasury Mar Contract (US, ETF: (TLT))
Tuesday''s gap down ranged around Friday''s 147-01 low, with room to 146-14 before a lower close would confirm a deeper drop underway targeting 144-16.

Crude Oil Mar Contract (CL, ETF: (USO, UWTI))
Monday''s test of last week''s high up to 54.00 barely held its 52.85 pullback limit, and Tuesday''s probe under 51.75 reversed momentum down intraday to probe under 50.00. Closing back above 52.85 is needed to launch another upleg.

Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
The bottoming potential tried again to gain traction Tuesday, surging through the 2.70 buy signal, which was still being overlapped. A second consecutive higher close on Wednesday would greet Thursday''s EIA report from a position of strength.

If the Chartroom''s late outage ate the Market Wrap recording... then ask any questions in this post''s comments section. I''m in contact with the host now about resolving their issues.

Pattern points... (Setups and technicals)
Tuesday''s session was essentially the pattern that Monday could have been. Backing-and-filling through the morning, rallying through the noon hour, and retracing Friday''s losses.

Friday''s ~2068.00 highs weren''t tested. Had they been, then closing below them Tuesday would have been bearish. Instead, the rally''s patience keeps alive potential for extending higher.

Tuesday afternoon''s buyers traction for their efforts, which also keeps alive the upside potential. Exiting the bias environment above the noon hour''s high, and entering the final hour above the bias environment''s high, should reward buyers with control of Wednesday morning''s bias environment. Exiting the open under 2057.00 would suggest otherwise.

Exiting the open under 2053.00 could even trigger a "session-long decline" setup. I''ll review its parameters in the First Trade blog post if overnight action threatens it.

Otherwise, while a downdraft from higher levels remains possible, be careful being short. The template that we''ve been discussing since last week, which continues tracking, could probe new highs at a steep slope.

What''s Next... (Outlook and opportunities)
With a three-day holiday weekend around the corner, Wednesday''s close is similar to a pre-expiration WedEX signal. There are a couple of different conditions. But essentially, a fresh high close Wednesday that isn''t invalidated Thursday could keep alive the rally''s momentum into next week.

WED morning signal (triggered at 10:15 ET) SPX ES Bias-up: above 2072.25
2067.25
...would target 2078.25
2073.25
Bias-down: under 2065.50
2059.50
...would target 2059.50
2054.50
Signal status: NO-BIAS, TESTED BIAS-DOWN SIGNAL 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.