Real Time DayTrading Signals - 01-21-2015

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...
Flat-to-higher ranging through the holiday had only fattened up the market for Tuesday morning''s slaughter. But sellers were done by noon. First, the open rejected both bias-up parameters and put into play both bias-down parameters. They were fulfilled by the morning''s 26-point post-open plunge, on the way back to Friday afternoon''s low. The balance of the session rallied, stopping pessimistically short of touching resistance. The afternoon rally gained traction for its effort, exiting the bias environment above the noon hour''s high and entering the final hour even higher.

Overnight action''s new info...
Dipping from yesterday''s 2016.75 close to attack 2013.00 reacted up to 2021.50, perhaps inspired by China''s market surge. Perhaps. China''s plunge three days ago had only a temporary impact. Similar to that delay, another dip has probed lower to 2008.00. This is the origin of yesterday''s last 30-minute 12-point surge,

If, then...
Having gained traction, yesterday''s rally is owed the reward of probing higher highs this morning. This reward would be invalidated by gapping down under a relevant low. That would become likely if this overnight drop isn''t contained pretty much here and now. Not containing it would be likely to retest yesterday''s lows, which this stage of the pattern would be unlikely to prevent extending down to last week''s lows.

First Trade...
Exiting the open at 9:45 under 2007.50 would be likely also to trigger the 2009.50 bias-down signal at 10:15. Exiting the open above 2014.00 would be unlikely to trigger bias-down.

Overnight pullback, and then some, retraced entirely.

The overnight pullback from 2021.50 had retraced the origin of yesterday''s last surge from the 2008.00 area. Not rejecting it could have launched a reversal back to last week''s lows.

But that wasn''t the premise. Yesterday''s rally had gained traction for its effort, so the premise was that its buyers would be rewarded with control of this morning''s bias environment.

Not recovering would have invalidated the premise. But after fulfilling the potential retest of pre-open lows down to 2006.25 described during the Market Tour, word leaked about tomorrow''s ECB QE. Despite its size being criticized, the market surged to within 1 point of this morning''s 2025.25 bias-up target.

Its reaction down to 2012.00 didn''t recover the 2018.75 bias-up in time to trigger. It was still being tested at 10:15 to invoke the grace period. And the premise of rewarding yesterday''s buyers says that either it will trigger, or not triggering will be ignored by no-bias trending.

WED afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 2040.00
2033.00
...would target 2045.25
2038.25
Bias-down: under 2027.00
2021.00
...would target 2021.50
2015.50
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))
Gapping up Wednesday was extended slightly higher after a reaction down had attacked Tuesday''s close. That wasn''t deep enough to fill the gap, and the optimism prevented the higher high from extending. Its retracement tested the 1.1575 pullback limit that keeps the door open to rallying more durably.

Gold Feb Contract (GC, ETF: (GLD))
Gapping up Wednesday to attack the 1307.00 overnight high was soon reversed into negative territory testing 1284.50.Avoiding a close under 1287.50 keeps alive the likelihood for retesting 1307.00.

Silver Mar Contract (SI, ETF: (SLV))
Extending higher overnight and gapping up to test 18.50 was reversed sharply and quickly down to 18.00, but still held above prior highs. The potential pullback to 17.56 remains alive.

30-year Treasury Mar Contract (US, ETF: (TLT))
Thursday night''s 61.8{faed0d6dca04cec8b6b7985efddb9b0651107a3aebb05f69f0166038b8c951f6} retracement back to 150-08 reacted down Wednesday to attack 148-23 within 4 ticks, whose break would launch a new extended downleg. Back above 149-24 would instead target a retest of Friday''s high up to 151-28.

Crude Oil Mar Contract (CL, ETF: (USO))
Popping up in reaction to a leak of Thursday''s ECB QE did help to establish that a relevant support was being tested. Aggressive uptrending is likely if a bottom has formed, and any shallower rallying would be suspicious. This week''s EIA report is delayed one day until Thursday due to Monday''s holiday.

Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
Testing 2.98 resistance pre-open and gapping up does help to confirm that the pullback is being stalked. A post-open dip avoided filling the gap back down to Tuesday''s close before recovering to a post-open high. It''s not an optimal bottom, but Thursday''s EIA report is being greeted from a position of strength that could more easily absorb an initially negative knee-jerk reaction.

If the reaction to ECB''s QE isn''t bullish... then Thursday''s open is probably indicated to gap down sharply.

Pattern points... (Setups and technicals)
Wednesday''s session did everything it could to facilitate a favorable reaction to Thursday''s pre-open ECB statement. At least, to facilitate an initially favorable reaction targeting 2041.00-2044.00: 

-- Tuesday afternoon''s buyers got the reward they were due by controlling Wednesday morning''s bias environment, but no more.
-- Reacting down into the afternoon bias environment''s low kept optimism in-check.
-- And upward momentum from the last 60-90 minutes'' rally will greet Thursday morning''s news.

A favorable reaction could still be reversed in the afternoon. But if the initial reaction isn''t favorable, then a reaction down to last week''s lows is probably underway. Wednesday''s closing action rallied, and the bias environment contained the afternoon''s 2016.25 low, so gapping down under it would form a "session-long decline" setup.

What''s Next... (Outlook and opportunities)
Although the ECB QE size was floated Wednesday morning, that was only a leak, perhaps a trial balloon. And it was criticized. Markets held up just for knowing with much greater certainty that some sort of program would be announced within hours. Presumably, the actual total won''t be lower. But even if it is higher than what was leaked, the pattern''s timing doesn''t change.

THU morning signal (triggered at 10:15 ET) SPX ES Bias-up: above 2039.00
2033.00
...would target 2044.25
2038.25
Bias-down: under 2027.75
2021.75
...would target 2021.50
2015.50
Signal status: LATE BIAS-UP SIGNAL, TESTED BIAS-DOWN SIGNAL AFTER TESTING BOTH BIAS-UP PARAMETERS, 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.