Day Trading Trading Signals - 03-03-2015

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''s pre-open slide back to Friday''s 2100.75 low was already bouncing into the open. The morning''s extended it back up to the 2111.00 bias-up signal in time to invoke the grace period, and barely triggered late bias-up targeting 2116.00. The afternoon''s pullback to 2107.00 was recovered to within 2-3 ticks of the 2116.00 target, neutralizing its attraction.

Overnight action''s new info...
Monday morning''s highs around 2111.00 immediately attracted price back down. Ranging there sideways back to 2113.50 is finally trying to break, now piercing a fresh low at 2110.50.

If, then...
Retesting last Wednesday''s 2117.75 high today doesn''t require gapping up. Double-topping with last week''s high requires only that its test be overly-optimistic. Gapping up is the likelier scenario that would fulfilll the overly-optimistic characterization. But recovering to fresh highs after gapping down would be optimistic, too -- then it would be overly-optimistic if reversed down in time to close back under prior highs, and especially back into negative territory where a bearish Pivot Reversal could form. Despite the overnight pullback, I''m anticipating it will be absorbed similar to yesterday''s pre-open weakness. Duplicating last Thu-Fri session-long ranging in negative territory isn''t likely at this stage, which means that the alternative to recovering would likely be trending down.

First Trade...
Exiting the open at 9:45 above 2111.00 would be unlikely to trigger the 2109.25 bias-down signal at 10:15. Exiting the open under 2106.50 would be likely to trigger bias-down.

Bias-down target met, and held, but not rejected.

A funny thing happened on the way to rejecting the overnight dive. Recovering 2111.00 through 9:45 would have made bias-down unlikely to trigger. But bouncing 3 points into and out of the open only attacked 2111.00 to within 1 tick. 

And then reversed down. Hard.

The potential for an 8-point rally back to last week''s highs became an 8-point plunge. This morning''s 2104.25 bias-down target was probed down to 2102.50, taking RSIs oversold.

Despite having missed the opportunity to renew the bias-down signal (by exceeding the target through 10:15) this is still a bias-down environment. Usually, holding a test of the bias-down signal does define the morning''s low, and sometimes also the session''s low. But, again, this is still a bias-down environment.

Exiting the bias environment at 11:30 back above its 2109.25 bias-down signal would be bullish. So bullish as to start anticipating a complete intraday recovery, and a complete intraday recovery would confirm new highs.

One alternative scenario is the "session-long decline" that barely missed triggering. The setup wasn''t optimal, because the open spent so much time ranging around yesterday afternoon''s low before extending lower. But unless its rejected no later than coming out of the noon hour -- and preferably before entering it -- much lower lows today would be likely.

TUE afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 2109.25
2107.25
...would target 2015.75
2114.00
Bias-down: under 2097.25
2095.50
...would target 2090.00
2088.00
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.

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))
The 2-1/2 day descending triangle pattern produced a gap down Tuesday. Its reaction back up into positive territory at 1.2175 was rejected back to the open''s lows. So long as Tuesday''s intraday high isn''t recovered, the break is targeting 1.1125.

Gold Apr Contract (GC, ETF: (GLD))
A sudden plunge Monday night momentarily pierced the 1195.00 objective before reversing back up as sharply to open Tuesday in positive territory above 1204.00. Testing the 1212.00 buy signal so quickly wasn''t likely to extend higher, and didn''t, instead reversing back down into negative territory attacking 1201.00..Lower lows should touch at least 1198.50, if not also pierce 1194.00.

Silver May Contract (SI, ETF: (SLV))
Monday''s night''s fresh low at 16.07 was recovered to probe positive territory Tuesday up to 16.58, but that was rejected by a return to fresh intraday lows attacking 16.15. Bounces should hold 16.40-16.45 if new lows remain in-play.

30-year Treasury Jun Contract (US, ETF: (TLT))
Tuesday''s gap down tested the 159-12 sell signal, bounced back to 159-24, and resolved down to a fresh low testing 158-27. That''s piercing under the lower-end of the two-week old low basis Jun, while also testing the upper-end of the same time frame''s consolidation basis Mar. Either is a candidate for forming a bottom, but must recover at least 160-00 to even begin signaling that momentum is reversing up. That level might be lowered after Wednesday.

Crude Oil Apr Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Monday''s bounce remained firm Tuesday, but didn''t extend higher to make a recovery any likelier.

Natural Gas Apr Contract (NG, ETF: (UNG, UNL))
Fresh lows Monday night weren''t retested by Tuesday''s slightly lower lows. Regardless, the nearest buy signal at 2.77 would still be credible if triggered.

WED morning signal (triggered at 10:15 ET) SPX ES Bias-up: above 2112.00
2110.25
...would target 2117.75
2116.00
Bias-down: under 2102.75
2101.00
...would target 2098.00
2096.25
Signal status: BIAS-DOWN, BIAS-DOWN TARGET EXCEEDED 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.

If Wednesday morning isn''t trying retest the highs... then a new downleg may be underway already.

Pattern points... (Setups and technicals)
Monday rejected the Thursday-Friday "ineffectual pessimism." Two days spent exclusively in negative territory, testing prior lows, but not trending down, followed by a close above both. But that didn''t prevent Tuesday from probing under both.

Prior lows held, as they had Thursday-Friday. Described another way, prior lows were further chipped away, without yet breaking lower.

Still topping, or already topped?

Tuesday was more ineffectual pessimism. Gapping down, spending the entire session in negative territory, and probing under prior lows, but only intraday. The topping pattern that began last Tuesday, and which was confirmed last Wednesday, hasn''t yet launched a downleg. 

But it''s vulnerable.

Regardless, last week''s high is still likely to be retested. Opening only slightly lower Wednesday, flat and firming, or gapping up -- an intraday rally would remain likely. But trending down through the open, triggering bias-down, would suggest the topping is complete.

What''s Next... (Outlook and opportunities)
Wednesday''s econ calendar is swamped, into and out of the noon hour. Even before then, Yellen speaks overnight. Reaction to ADP helps us to anticipate Friday''s reaction to payrolls. More Fed speakers into the noon hour are followed by the Beige Book release.