Real Time Market Updates and Trade Signals - 05-25-2016

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... Tuesday’s “session-long rally” setup succeeded at producing each of its required elements, i.e. all but one timing window probed its prior timing window’s high. Gapping up above prior highs offered a highly-reliable early entry to capture almost all of the first hour's 15-point first hour surge, which fulfilled the 2068.00 objective and touched its room for noise up to 2072.00. The next higher objective at 2080.50 was barely attacked to 2077.25, which reacted down 5 points into the close. But the one timing window not probing higher was the afternoon bias environment, which prevented the rally from gaining traction for its effort. Overnight action's new info... The rally resumed with little delay, attacking the 2080.50 objective, which is this morning's bias-up signal. Surging to 2084.50 reacted down into Europe's opens and consolidated at 2078.50. The rally resumed and extended to fresh highs within 1 tick of this morning's 2085.75 bias-up target, now reacting down to 2082.50. If, then... So, is this time different? The past three weeks began with failed recovery attempts. Tuesday's was no less convincing, rallying steeply throughout the day to test resistance. Tuesday's attempt is offering something new -- extending higher overnight. This was expected, as follow-through is normal following a session-long rally. More so, it maintains a steep slope, which we've long expected to characterize a valid recovery. It's now threatening to invalidate the widely watched Head & Shoulders pattern, which I've noted wasn't valid. And after the Friday-Monday hibernation, the wide intraday ranging appears to be back on-track.       [So sorry for the length this morning, but there's a lot...] What if this time isn't different? Gapping up is the only credible start to a durable rally, since Tuesday’s rally didn’t gain traction for its efforts. But trending up overnight can invert to trending back down from the open, if the open were to hold a test of relevant resistance. Otherwise, Tuesdays breakout is in position to be confirmed by a second consecutive higher close. That would require at least one more higher close, and probably extend to new highs. First Trade... [Click here to view the Bias parameters] Exiting the open at 9:45 under 2076.00 would be unlikely to trigger the 2080.50 bias-up signal at 10:15. Exiting the open above 2082.00 would be likely to trigger bias-up. Exiting the open above 2088.00 would be likely also to exceed the 2085.75 bias-up target at 10:15 to renew the bias-up signal, next targeting 2091.50.

Straight out of the open, straight up, straight to its target. The overnight rally had met the 2085.75 bias-up target to within 1 tick. Its pre-open pullback pierced this morning's 2080.50 bias-up signal by 1 tick. The post-open recovery didn't hesitate. A buy signal quickly triggered above 2083.75 and extended to fresh highs. Minutes after renewing the bias-up signal at 10:15, the 2092.00 renewed bias-up target was touched. Its 3-1/2 point reaction down has violated the pullback limit. Simultaneously overbought 1-minute and 3-minute RSIs at the high require its retest. If not for the high's required retest -- probably up to 2092.75 -- a sell signal would already have triggered. A little deeper pullback under 2088.25 would be likely to extend to 2084.00 before recovering. This may be an opportunity for the rally's sponsorship to rest, refueling by letting shorts trap themselves. A repeat of yesterday's session-long rally is not impossible, but also not likely.

WED afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 2092.25 2089.50 ...would target  2097.50  2094.75 Bias-down: under  2085.00 2082.25 ...would target  2078.75  2076.00 Signal status: BIAS-UP 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.

Wednesday morning's overbought RSIs at 2092.00 had required its retest. The afternoon's extremely narrow 2-1/2 point range resolved up just enough to touch 2092.00. But that only stretched the rubber band to snap back down to fresh afternoon lows. Plunging to within 1 tick of the noon hour's 2086.00 low digested the sudden reversal, and then recovered it. Fresh highs were probed up to 2092.50. That also reacted down -- considerably, to 2087.50, and only a little less aggressively than plunging. It's pretty choppy, but it's also pretty narrow. Like a very large pebble being cast into a very small pond. But it is a lot chop at the high of a move. Nevertheless, the afternoon's 2094.75 unfinished business above outstanding. It requires being retested, too. Wednesday's second consecutive higher close confirms Tuesday's breakout, now requiring at least an eventual third higher close. Having entrenched itself, the rally can afford to hesitate again with another pullback. But not very deep or for much time, as a valid recovery should still be steep. 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  2095.50 2092.75 ...would target  2101.25  2098.50 Bias-down: under  2083.25  2080.50 ...would target 2075.75  2073.00 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.